RE #180: Chris Powers - GP Fees and The Pathway to Building a World-Class REPE Operating Platform

On this episode, Chris does a full deep dive into the world of fees, including what they are, should you be charging fees at all, and when, fee misconceptions, the benefits of a profitable company, and the pathway to building a world-class REPE operating platform. Chris also answers your questions submitted on Twitter and much more!

Follow Chris on Twitter: https://www.Twitter.com/FortWorthChris
Follow Chris on LinkedIn: https://www.linkedin.com/in/chrispowersjr/
Learn more about Chris Powers & Fort Capital: https://www.FortCapitalLP.com
Follow Fort Capital on LinkedIn: https://www.linkedin.com/company/fort-capital/

Listen & Subscribe on Spotify: https://open.spotify.com/show/7oIeNSaSJ4zkTQOXiedyOr?si=dEM48cSPQ9OIQ1HiD8sjrg

Listen & Subscribe on Apple Podcasts: https://podcasts.apple.com/us/podcast/the-fort-with-chris-powers/id1410549811

(01:16) - Why Fees?

(02:45) - Misconceptions: GP’s Charging Fees and Making a Profit is Bad

(05:20) - Charging Market Fees and Getting Great Returns

(06:49) - What are the benefits of running a profitable company?

(10:05) - GP’s That Don’t Charge or Offer Reduced Fees Are Hurting Their OpCo in the Long-Run

(11:01) - The Difference Between OpCo’s and Assets

(13:18) - Understand Where Your Company is: Fee Structuring for Young Companies

(15:03) - How to Charge Fees and How to Talk About What’s Behind the Fees

(17:43) - How do we know what we can charge for and what we cannot?

(21:24) - Fort Capital’s Fee Strategy Early On

(23:35) - An Outline of How to Think About Fees & Example Scenarios

(30:27) - GP’s that Don’t Charge What They’re Worth

(31:25) - Ways to think About What You Should Be Charging

(36:04) - Running Your Company as a Break-Even Business vs. a Profit-Generating Business

(37:53) - Specific Fees to Think About

(49:18) - Real Estate Private Equity: Fees Charged to Allocate Capital to GP’s vs. Fees Charged by GP’s Who Actually Operate

(50:47) - Charging the Right Structure of Fees for Your Business

(53:50) - Twitter Question: What’s an example of a deal you’ve done and how the fee dollars are allocated?

(59:00) - Third-Party Providers

(1:00:32) - Twitter Question: Can an established sponsor with capital charge an acquisition fee that’s equal to their contribution?

(1:04:16) - Twitter Question: How have Fort Capital’s fees changed over time?

(1:07:56) - Twitter Question: 3rd Party Management & Leasing vs. Vertically Integrating

(1:10:14) - Wrap Up

The FORT is produced by Johnny Peterson & Straight Up Podcasts