Equity Joint Ventures: Structuring Capital Contribution, Waterfall and Other Payment Provisions

Promoted Interest, Carried Interest, Cash Flow Splits and Related Issues

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Thursday, November 14, 2019

Recorded event now available

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Program Materials

This CLE webinar will guide deal counsel on structuring capital contribution and distribution provisions in equity joint venture (JV) agreements. The panel will discuss key legal and tax issues and JV agreement provisions, including promoted interest, carried interest, cash flow splits, and related provisions.

Description

Capital contribution and waterfall provisions are critical and complex components of equity JV agreements and are fiercely negotiated. Counsel drafting and negotiating these provisions must ensure that the clauses are consistent with the economic arrangement of the parties.

The provisions dealing with capital contributions address the venture's need for capital investment and the members' or partners' funding obligations. Counsel must navigate issues such as the timing and amounts of contributions, the consequences for failing to fund contributions, and ways to make up for unfunded contributions.

The sequential order of the waterfalls is critical to ensuring the waterfall provisions work as intended, and the distributions conform with the substance of the deal among the JV partners. Structuring waterfall provisions requires an understanding of payment priorities, economic terms, and tax implications.

Counsel must ensure the waterfall provisions are consistent with the partnership tax allocation provisions of the JV agreement to avoid adverse tax consequences for the entity and its members or partners.

Listen as our authoritative panel of deal attorneys discusses best practices for structuring capital contribution and waterfall provisions in equity JV agreements, focusing on how to avoid potential legal and tax pitfalls.

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Outline

  1. Structuring capital contribution provisions
  2. Structuring waterfall provisions
    1. Promoted interest
    2. Carried interest
    3. Cash flow splits
  3. Tailoring tax provisions to waterfalls

Benefits

The panel will review these and other key issues:

  • What are the critical considerations for counsel when drafting and negotiating capital contribution provisions in JV agreements?
  • What are the different types of waterfall provisions, and when should each be used?
  • What are the key considerations and best practices for counsel drafting and negotiating waterfall provisions in JV agreements?
  • What are pitfalls to avoid when tailoring tax provisions to waterfall provisions?

Faculty

Ashley, Allen
Allen P. Ashley
Partner
DLA Piper

Mr. Ashley concentrates his practice in the areas of US federal income taxation and the laws affecting business...  |  Read More

Marrs, Nathaniel
Nathaniel M. Marrs
Partner
DLA Piper

Mr. Marrs represents domestic and international fund sponsors and other institutional owners and operators of real...  |  Read More

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