Accelerated Monitoring Fees
Definition - What does Accelerated Monitoring Fees mean?
Accelerated monitoring fees are lump sum fees charged to portfolio companies by private equity advisors for services. This happens when the portfolio company is sold ahead of the scheduled holding period.
Divestopedia explains Accelerated Monitoring Fees
Monitoring fees are fixed amounts paid annually by the portfolio company for advisory services, but are sometimes calculated as a percentage of profits or revenues. These fees paid to private equity firms are included in the Management Services Agreement which also states the management fee, typically 2%, and a percentage of profits, typically 20%; hence, the term, 2 and 20 fee structure.
The accelerated monitoring fees are collected when the portfolio company is sold in lieu of the payment that the private equity fund would have received had the portfolio company been kept for the full holding period, which is typically five to ten years.