In this paper I collect fee, leverage, and target return data, using it to calibrate a structural model of private equity fund leverage choice. The empirically calibrated model generates outputs that closely match moments in the data. The modeling process includes developing a tradeoff theory of fund capital structure and a theory of investor return targeting. Catch-up fee provisions in incentive contracts enable more skillful fund managers to extract higher fees while also satisfying investors' levered return targets. Results indicate that fixed carry hurdle rate and share percentage contracting terms are used to help screen lower-skill fund managers from the PE market.