Private equity investment is a high-risk investment mode, so it is particularly important to limit the investment scope, investment mode and investment ratio of each project. However, due to the complexity and inexhaustible scope of investment and investment methods, "negative constraints" are often used in practice to control investment risks. For example, it is agreed that the investment in a project shall not exceed 20% of the total subscribed capital contribution, and the investment shall not bear unlimited joint liability, and the bank loan of the partnership enterprise shall not exceed 40% of the total subscribed capital contribution.
In practice, there are usually two ways: first, management fees include operating costs. The advantage is that it can effectively control operating expenses and control costs. At present, many domestic private equity investment funds have adopted this simple way to attract funds. Second, the management fee is shared separately, and the operating expenses of the limited partnership are collected by the limited partnership as a cost, which is not included in the management expenses of the general partner. This is an internationally accepted way. The amount of management fee is usually 0.5%-2.5% according to a certain proportion of the managed funds, and the extraction method can be quarterly, semi-annual or annual.