Berkshire Value Fund

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Berkshire Value Fund
Management fees and other fee structures are important in private equity funds because they allow the fund manager or General Partner (GP) to generate an income stream from the Fund to cover its operating and management costs. The fees are primarily intended to allow fund managers to pay salaries and cover overhead expenditures such as office space involved with running the Fund or funds. This immediately translates into the Fund's health (recall funds' reliance on attracting and maintaining important personnel) and returns for the limited partners (LPs). According to Berkshire's term sheet, the Investment Management Fee will be paid at an annual rate of 1.5% of each Limited Partner's Commitment throughout the Commitment Period. Following the Commitment Period, the Investment Management Fee will be paid annually at a rate of 1.5% of each Partner who has drawn Commitments less the percentage of such drawn Commitments used to buy Investments that have been liquidated ("Berkshire"). Therefore, the fee structure outlined by Berkshire is aligned with the L.P.
Berkshire offers a three-year commitment period from the Final Closing, subject to a one-year extension with Advisory Committee approval. The term span is eight years from the Final Closing, with a maximum of two one-year extensions granted by the Advisory Committee. The durations indicated above are logical with the assets managed by the holding. Berkshire holds assets from different industries, which will dictate a specified commitment period for materializing returns. An example of such an asset and its cycle is when BMVF I completed in October 2005 with $334 million in capital commitments from domestic and foreign institutional investors, including a $25.0 million investment from Berkshire ("Berkshire"). When paired with t...