Fees and Compensation — Form ADV Part 2A (3/31/2017)
[Brochure]
Item 5: Fees and Compensation
LLM receives management fees from three of the Funds as compensation for the
investment management and administrative services it provides to the Funds. LLM is
paid an annual management fee equal to 2% of the committed capital of the Funds
during the investment period. Thereafter, LLM is paid 2% per annum of the
commitments drawn less aggregate net unrealized losses and returns of capital. The
management fee is paid semi-annually and less than six months in advance.
Fees are negotiated during the formation of the investment funds organized by LLM and
prior to the execution of fund subscription agreements and partnership signature pages.
The General Partner uses two methods to deal with fees. One method is to call capital
from the Limited Partners to cover management fees and other expenses. The other
method is to retain from distributable portfolio investment realization proceeds enough
to cover management fees and other expenses. Amounts have been retained from
realization proceeds to cover management fees and expenses as provided by the
Partnership Agreement. Capital is usually called at least twice per year to cover
management fees and other expenses, unless the funds have realization proceeds that
can be retained to cover management fees and expenses. The Funds also call capital
periodically to make portfolio investments.
Other expenses that the Fund Limited Partners are allocated include audit and tax return
preparation, legal, consulting, accounting services, Directors’ and Officers’ insurance and
corporate filing fees.
Fund Limited Partners may pay management fees and other expenses in advance, but
historically Limited Partners have paid management fees and other expenses based on
capital calls received from the General Partner. Unearned management fees and other
expenses will be distributed to the Limited Partners based on the distribution provisions
of the Fund partnership agreements.
Item 6: Performance Fees and Side-by-Side Management
An affiliate of LLM which acts as General Partner of the Funds has entered into
performance‐based fee arrangements with three of the Funds. Such fees entitle the
General Partner to a percentage of the profits of the three Funds, customarily referred to
as “carried interest,” which is 20% and is contingent on the Funds achieving certain
investment performance hurdles. The other Funds do not pay performance fees. Clients
should be aware that performance-based fees may be deemed to create a conflict of
interest for LLM, as there can be an incentive for LLM to make investments that are
riskier or more speculative than would be the case in the absence of a performance-
based fee, or to allocate investments to Funds that do not pay performance fees. To seek
to mitigate this inherent conflict of interest, LLM has implemented allocation policies
and procedures for allocating investment and divestment opportunities to Funds. See
Item 8 for discussion related to Conflicts of Interest.
Account Minimums and Types of Clients — Form ADV Part 2A (3/31/2017)
[Brochure]
Item 7: Types of Clients
LLM has six Clients that invest principally in private equity and equity‐related
investments in companies or similar investment vehicles that have significant potential
for value creation. Investors in the Funds managed by LLM may include high net worth
individuals and a variety of institutional investors (e.g. trusts, employee benefit plans,
endowments, foundations, corporations and other types of entities, including private
funds of funds). All investors are required to be “accredited investors” (as defined in
Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities
Act”), or otherwise permitted to invest under applicable securities laws. The minimum
investment is at least $100,000.