Glossary

Acquisition Fee

A one-time fee paid to a GP/sponsor at closing for sourcing, underwriting, and closing a deal on behalf of its LPs, commonly 0.5%-1.5% of purchase price, paid regardless of how the investment subsequently performs.

The acquisition fee compensates the sponsor for the work of finding, underwriting, negotiating, and closing a deal -- distinct from and paid independently of the promote, which is performance-linked and only paid after LPs clear their preferred return. Because the acquisition fee is earned at closing regardless of outcome, LPs and their advisors typically review it alongside the asset management and disposition fees as part of a fund or deal's total fee load, not in isolation, since a rich acquisition fee on a large deal can itself represent a meaningful sum before the investment has produced any return at all.