What is the difference between a GP, management company, and carry vehicle?

The three entities compared, dimension by dimension

Each line names the dimension, then what is true of the general partner, the management company, and the carry vehicle in turn. Read down the list rather than across a table.

• Lifespan. The general partner is tied to one fund vintage. The management company persists across vintages, described in the commentary as the hundred-year entity. A carry vehicle follows its fund.
• Ownership. In a simple firm the same people own all three in the same percentages. In a developed one they diverge, and the commentary notes that a founder may hold more of the management company than of the carry while a junior partner may have carry in a single fund and no management company stake at all.
• Economics received. The general partner receives and passes on carried interest. The management company receives the management fee. The carry vehicle exists to allocate carry among individuals.
• Employment. The management company employs the team. The general partner usually has no employees.
• Expenses. Rent, salaries, systems, and the rest of the firm's fixed cost sit at the management company and are met from the fee. Fund expenses are a separate matter governed by the fund documents.
• Decision-making. Investment decisions are made under the fund documents and exercised through the general partner. Firm decisions, meaning hiring, budget, and strategy, sit at the management company.
• Assets owned. The general partner holds fund-specific interests. The management company holds the brand, the systems, the leases, and the intellectual property.
• GP commitment. The general partner makes the commitment to the fund, and the commentary is explicit that somebody must fund it: the members of the general partner, or related persons, usually commit capital to the general partner so that it can commit to the fund.
• Governance. Each entity has its own agreement, and the three have to agree with each other. The commentary warns that if these documents are not coordinated, gaps can appear.
• Service providers. The administrator, auditor, and counsel are engaged in relation to the fund; the firm's own providers sit with the management company. Blueprint's page on service providers covers the appointments.

Why the split exists at all

Four reasons, and only the first is the one most managers give.

• Vintage separation. Each fund's economics and liabilities stay with that fund's entities. The commentary describes distinct per-vintage entities as ring fencing liability on the most valuable income stream, carried interest.
• Different economics for different people. Carry is per fund and vests; management company participation is about the firm. Keeping them in separate entities lets a firm change one without reopening the other.
• Tax and accounting requirements. The commentary notes that income and loss associated with the carry must be allocated to somebody because federal tax laws mandate it, which is one reason the carry cannot simply be left undocumented.
• Continuity. A firm that intends to raise a second fund needs something that survives the first, which is the management company's whole purpose.

Departures, which is where the difference becomes concrete

The commentary describes the usual pattern: a departing person keeps the vested portion of carried interest and forfeits the unvested portion, while management company economics are treated differently and a departing individual typically loses future profit participation even where vested carry in specific vintages survives.

That asymmetry is not a detail. It means a partner leaving a firm can retain a claim on Fund I's carry for a decade while having no continuing interest in the business, and it means the obligations attached to that retained interest, meaning confidentiality, clawback restoration, and what they may say about the record, have to have been written down at the start. The commentary's warning about uncoordinated documents lands hardest here.

Blueprint's page on presenting deals from a prior firm covers the other half of the same problem, which is what a departing investor may say about the deals they worked on.

What the entity split does not settle on its own

Knowing which entity does what leaves the following open, and none of them is a judgment call a manager should make alone. Each has produced expensive corrections for firms that tried.

• How each entity is treated for tax in every jurisdiction where a partner is resident, which is a tax question and often more than one.
• How carried interest is characterised and taxed, including holding-period rules that can change the answer materially.
• How the entities are accounted for and consolidated, which affects what the audited statements show.
• Whether the management company or the general partner needs any registration, licence, or exemption filing.
• How vesting, forfeiture, and clawback restoration are drafted, which is where the coordination the commentary warns about actually happens.
• Whether any of it changes when a team member moves country, which is common and rarely planned for.

This page is educational and general. It is not legal, tax, accounting, or securities advice. Entity structure, its tax treatment, and the agreements between partners should be settled with fund counsel, a tax adviser, and an accountant.

What limited partners are testing

Allocators ask about the entities because the answer tells them how the firm is actually held together.

• Does the manager know which entity employs them and which one they own?
• Is the general partner commitment funded, and by whom?
• Is carry vesting documented, and does it survive a departure the way the manager says it does?
• Do the entity agreements agree with each other and with the fund documents?
• Is the management company solvent through the fund's life, which is the runway question in another form?