Private Equity Carried Interest Clawbacks: Fund Agreement Mechanisms and Tax Considerations
Note: CPE credit is not offered on this program
Recording of a 90-minute premium CLE video webinar with Q&A
This CLE course will discuss clawbacks of carried interest distributions received by private equity fund managers, focusing on the various clawback mechanisms, structuring fund distribution waterfalls and clawback provisions, and the tax ramifications of clawback events.
Outline
- Fund distribution waterfall options and carried interest economics
- Options for preserving the economic deal
- Tax implications of carried interest clawbacks
- Detailed analysis of clawback features
- 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 available mechanisms for preserving the partners' economic deal to the greatest extent practicable?
- 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
Joseph M. Mannon
Shareholder
Vedder Price
Mr. Mannon is Chair of Vedder Price's Private Fund Formation group and a member of the firm's Investment... | Read More
Mr. Mannon is Chair of Vedder Price's Private Fund Formation group and a member of the firm's Investment Services group. He focuses his practice on legal and compliance matters for investment advisers, mutual funds, closed-end funds and unregistered vehicles such as hedge funds, hedge fund of funds and other investment entities. With regard to unregistered vehicles, he frequently counsels clients on fund formation and structuring matters for funds organized both in the United States and abroad. He also counsels clients on issues relating to commodity trading advisers and commodity pool operators. Mr. Mannon has substantial experience in regulatory and compliance matters affecting investment advisers, including registration and marketing, such as compliance with Global Investment Performance Standards (GIPS), as well as in drafting compliance policies and procedures. He counsels advisers on trading agreements, including brokerage and derivatives agreements. He also conducts mock Securities and Exchange Commission (SEC) examinations and represents clients before the SEC and other regulators in examinations and investigations. He also spends significant time counseling registered and unregistered investment company boards.
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JoonBeom Pae
Partner
Mayer Brown
Mr. Pae's practice focuses on the tax aspects of the formation, financing and investment activities of domestic and... | Read More
Mr. Pae's practice focuses on the tax aspects of the formation, financing and investment activities of domestic and international private funds. He regularly advises both sponsors and investors in connection with structuring and operation of various types of funds, including buyout, infrastructure, real estate and debt funds. Mr. Pae is also experienced in secondary sale of fund interests and M&A transactions involving partnerships.
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Max J. Rosenberg
Partner
Paul Hastings
Mr. Rosenberg focuses his practice on the representation of private investment fund sponsors, managers and investors in... | Read More
Mr. Rosenberg focuses his practice on the representation of private investment fund sponsors, managers and investors in all aspects of the structuring, documenting, offering, negotiating and operating of private investment funds and related investment vehicles, including real estate, debt, infrastructure and private equity funds, and co-investment vehicles. He regularly addresses issues arising under corporate, partnership, securities, investment management, ERISA, and tax laws. Mr. Rosenberg assists in advising financial institutions, investment managers and institutional investors, and regularly negotiates fund structures and terms with leading domestic and foreign pension plans, foundations, endowments, insurance companies, and other institutions. He also has experience in organizing and negotiating co-investment vehicles, structuring promote arrangements for investment management team members, representing investment funds and investors in connection with the secondary sale of fund interests, and advising with respect to issues relating to capital commitment-backed subscription line credit facilities.
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