Item 5 – Fees and Compensation
As compensation for investment advisory services rendered to the Funds, Accretive may receive
from a Fund an annual management fee. The specific terms of the management fees are set forth in
the applicable Fund’s organizational documents. Depending on the applicable period of the Fund’s
term, the management fees may be based on committed or invested capital and may be payable
either quarterly or semi-annually in advance. Generally, the management fee for any period in
which Accretive serves as investment adviser for less than a full period will be prorated on the
basis of the number of days in such period compared to the number of days Accretive served as
investment adviser during such period. As described below, the management fee may be reduced or
waived in some circumstances in connection with the receipt by Accretive or its related persons of
various fees paid by actual or prospective portfolio companies. The management fee is generally
subject to waiver or reduction by Accretive in its sole discretion, including in connection with
investments made by the general partners, managers or related persons. The management fee may
also be reduced to offset certain Fund expenses and other fees received by Accretive or its
affiliates, in each case in accordance with the particular terms of the Fund’s organizational
documents.
To the extent provided in the investment advisory agreements and the organizational documents of
the Funds, Accretive will pay out of its management fees certain of its own operating expenses,
including expenses on account of rent, utilities, office supplies, office equipment, travel,
entertainment, compensation of its employees (other than the performance-based compensation
described in Item 6 below) and other routine administrative expenses relating to the services and
facilities provided by Accretive to the Funds. The Funds typically bear all other expenses relating
to them to the extent not borne by its portfolio companies, including organizational, legal,
insurance, accounting, investment banking, consulting, research, brokerage, finders’, custody,
transfer, registration, interest, taxes and extraordinary expenses, and other similar fees and
expenses. Some of the expenses borne by the Funds may relate to costs associated with unexecuted
transactions.
Accretive generally deducts management fees and expenses directly from the assets of the Funds
(and accordingly, from the capital accounts of the Funds’ investors). The details of how the
management fees are calculated for the Funds can be found in the organizational documents of the
Funds, which are provided to potential investors.
Other Fees
The general partner or manager of certain Funds may impose management fees for late
subscriptions, which must be paid concurrently with the investor’s subscription.
Accretive and its affiliates will typically perform management, advisory, transaction related
services, financial advisory and other services for, and will receive fees from, actual or prospective
portfolio companies or other deal related investment vehicles of the Funds, including such fees in
connection with mergers, acquisitions, add-on acquisitions, refinancings, public offerings, sales and
similar transactions. These fees may be significant and may, in some instances, exceed the
management fee.
Although such fees are in addition to the management fees paid by the Funds, Accretive will in
some circumstances reduce future management fees in connection with the receipt of these fees.
The calculation of such reduction varies from Fund to Fund and is described in the applicable Fund
organizational documents. Such reductions will be credited on a periodic basis, as applicable. To
the extent any such credit would reduce the management fee for a given period below zero, such
credit will be carried forward for future application. These fees are disclosed in the annual financial
statements of the applicable Fund.
From time to time, certain employees of Accretive may engage in outside business activities that
result in the payment of consulting fees to such individuals. Prior to an employee’s entering into
any such arrangement, the Chief Compliance Officer or, in the case of the Chief Compliance
Officer, one of the firm’s Managing Partners reviews the terms thereof to determine whether such
arrangements create a conflict of interest for employees to provide such services and/or receive fees
or compensation. See Item 10 of this brochure for additional information regarding Conflicts of
Interest.
Although Accretive does not generally utilize the services of broker-dealers for transaction related
services, in the event that it chooses to use a broker-dealer for limited purposes relating to a
particular Fund, such Fund may incur brokerage and/or other transaction costs.
See Item 12 of this brochure for additional information regarding Accretive’s brokerage practices.