Private Equity Carried Interest Clawbacks: Fund Agreement Mechanisms and Tax Considerations

A live 90-minute CLE webinar with interactive Q&A


Wednesday, March 20, 2019

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, February 22, 2019

or call 1-800-926-7926

This CLE webinar will discuss clawbacks of carried interest paid to private equity fund managers, focusing on the various clawback mechanisms, structuring fund economic provisions and clawback provisions, and the tax ramifications of clawbacks of carried interest.

Description

Most private equity funds provide for a clawback mechanism requiring the manager to return any carried interest to investors if the manager earned more than the agreed-to percentage of distributions. A problematic scenario arises when the principals or employees who received the carry distributions are no longer employed by the firm.

Practitioners representing fund managers must be able to effectively draft fund agreement provisions that anticipate carry clawbacks on managers. Practitioners representing investors must understand their rights to recoup carried interest distributions to the sponsor.

There are tax consequences when managers or sponsors must return carried interest already distributed. Fund documents must be carefully drafted to address these tax consequences.

Listen as our authoritative panel of investment fund practitioners analyzes scenarios in which carried interest paid to a private equity fund may be subject to clawback. The panel will discuss various clawback mechanisms, fund economic provisions, clawback provisions, and the tax ramifications of clawbacks of carried interest.

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Outline

  1. Fund waterfall options and carried interest economics
  2. Options for preserving the economic deal
  3. Tax implications of carried interest clawbacks
  4. Detailed analysis of clawback features
  5. GP-level implications of carried interest clawback

Benefits

The panel will review these and other key issues:

  • How do variations in distribution waterfalls impact the timing of carried interest distributions to the sponsor? What are the related tax implications?
  • What are the available mechanisms for preserving the partners' economic deal?
  • What are the critical tax and non-tax features of carried interest clawbacks?
  • What are the income tax ramifications of carried interest clawbacks?
  • What are the GP-level considerations arising from carried interest clawbacks?

Faculty

Stults, David
David H. Stults

Partner
Kirkland & Ellis

Mr. Stults concentrates his practice on representing domestic and international private fund sponsors in connection...  |  Read More

Virmani, Aalok
Aalok Virmani

Partner
Kirkland & Ellis

Mr. Virmani's practice focuses on the tax aspects of forming and investing in private equity funds, hedge funds and...  |  Read More

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Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

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