Once upon a time in the early 1990s, my energy team was involved in a nice oil and gas production property with a top five private equity firm from Houston as the financier.  We had arranged the purchase of the property and they had put up the capital to acquire the property.  Since it was their capital, they wanted to manage the asset and make the purchase/sale decisions.  They had borrowed money to finance the property (generally a very poor decision in the volatile oil and gas business).  We rock along for a couple years, making nice returns (north of 18% annually) and a buyer approaches the firm wanting the property. The final negotiated generous price of $81 million would have generated a 27% IRR for the financier and done much better for us.  

This is where the story gets interesting.  The private equity team showed its greedy side at the most inopportune time.  The fund managers had a bonus structure that was not enhanced by the 27% IRR we had negotiated.  If they took the $81 million offer, their bonuses would only be $2.5 million, if they could get $85 million for the property, their bonuses would be $4.5 million for the 4 man team.  They DECLINED the 27% return purchase price.  

Needless to say, within a month after the scheduled closing date, the price of oil collapsed, the lender called the note and we were left holding an empty sack with a $30 million loss to the PE firm.

LESSON TAKE AWAY: Under no circumstance do you want to be in bed with a GREEDY manager that is motivated by his own pocketbook.  You want a manager whose experience overrides greed.  A partner that puts your well-being ahead of his own at all cost.