Item 5. Fees and Compensation
TSG and/or its affiliates typically receive compensation in the form of Advisory Fees (defined below),
Carried Interest (defined below in Item 6), and certain fees or expense reimbursements from Portfolio
Companies.
Advisory Fees
As compensation for investment supervisory services rendered to the Funds, TSG receives from each such
Fund an advisory fee (each, an “Advisory Fee”) typically calculated based on committed capital. Advisory
Fees are typically reduced at certain points during the life of a Fund as described in the respective Fund
Governing Documents and Item 11. As described in “Portfolio Company Fees” below, Advisory Fees paid
by a Fund are also reduced by other fees or compensation received by TSG or its affiliates that relate to
such Fund’s activities and investments, or by certain excess organizational or other expenses borne by such
Fund. Advisory Fees paid by a Fund are indirectly borne by the Investors.
The precise amount of, and the manner and calculation of, the Advisory Fees for each Fund are established
by the Adviser and are set forth in such Fund’s Governing Documents. The Advisory Fees and other fees
and distributions described herein are generally subject to modification, waiver or reduction by TSG in its
sole discretion, both voluntarily and on a negotiated basis with selected Investors via side letter and other
arrangements, which are generally not disclosed to other Investors in the same Fund. The fee structures
described herein may be modified from time to time. Fees differ from one Fund to another. Certain Funds
and Investors in such Funds incur lower or no Advisory Fees.
Advisory Fees billed to and received from the Funds vary Fund by Fund and are payable quarterly in
advance with respect to certain Funds, or semi-annually in advance with respect to other Funds. Upon
termination of an advisory agreement, Advisory Fees that have been prepaid are generally returned on a
prorated basis.
TSG typically deducts Advisory Fees from the applicable Fund directly from the Fund’s assets. Investors
do not have the ability to choose to be billed directly for Advisory Fees incurred.
Portfolio Company Fees
In addition to the Advisory Fees and Carried Interest (as defined below in Item 6), TSG and its affiliates
from time to time receive a variety of other fees relating to the investment activities of a Fund and its
Portfolio Companies including monitoring fees and directors fees with respect to the Portfolio Companies
(collectively, “Portfolio Company Fees”) pursuant to agreements with Portfolio Companies of the Funds
governing the advice and consultation, operational management and similar ongoing services provided by
TSG to such Portfolio Companies. TSG or its affiliates receive monitoring fees pursuant to monitoring
agreements with Portfolio Companies of the Funds governing the advice, consultation and other similar
ongoing services provided by TSG to such Portfolio Companies. Generally, in the event of an initial public
offering or other disposition, TSG ceases collection of monitoring fees.
The amount and timing of Portfolio Company Fees received by TSG or the Affiliated General Partners are
generally specified in the agreement or other documentation governing the applicable transaction.
The payment of Portfolio Company Fees by Portfolio Companies will, in some, but not all, circumstances
create a conflict of interest between TSG and the Affiliated General Partners, and the Funds and their
Investors because the amounts of these Portfolio Company Fees and reimbursements are often substantial
and the Funds and the Investors generally do not have a direct interest in these fees and reimbursements.
TSG determines the amount of these Portfolio Company Fees for the services provided and reimbursements
in its own discretion, subject to agreements with sellers, buyers, and management teams, the board of
directors of or lenders to Portfolio Companies, and/or third-party co-investors in its transactions, and the
amount of such fees and reimbursements often will not (except in connection with the reductions described
herein) be disclosed to the Investors.
In many cases, with respect to the implementation of the arrangements described above, there is not an
independent third party involved on behalf of the relevant Portfolio Company and therefore the fees are not
subject to a market check. A conflict of interest exists in the determination of any such fees and other related
terms in the applicable agreement with the Portfolio Company by virtue of TSG acting on behalf of both
parties.
TSG either voluntarily or under agreements with the Funds offsets Advisory Fees by 100% of the portion
of Portfolio Company Fees attributable to a particular Fund’s investment in the applicable Portfolio
Company.
Expenses
Expense Reimbursement
A Portfolio Company will often reimburse TSG for expenses, including without limitation, travel and
travel-related expenses, meals and entertainment expenses, including, as applicable, closing dinners and
mementos, transportation and meals, social and entertainment events with Portfolio Company management,
customers, clients, brokers and service providers, expenses relating to training programs, meetings or other
events (whether or not such programs, meetings or events are attended by Portfolio Company personnel),
expenses relating to hiring Portfolio Company personnel (including background checks, recruiting and
relocation expenses), indemnification expenses, certain legal expenses (including legal costs associated
with reviewing financing documents and agreements, whether on behalf of a portfolio company borrower
or a lender) and similar out-of-pocket expenses, consulting fees and other cash and non-cash compensation
and expenses incurred by TSG in connection with its performance of services for such Portfolio Company,
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