Private Equity Waterfall and Carried Interest Provisions: Economic and Tax Implications for Investors and Sponsors
Structuring Distribution Waterfalls, Carried Interest Clawbacks and Allocations; Carried Interest Sharing at the Fund Sponsor Level; Related Planning and Drafting to Address Tax Consequences
Recording of a 90-minute CLE/CPE webinar with Q&A
Conducted on Wednesday, March 22, 2017
Recorded event now available
This CLE webinar will analyze various methods of structuring waterfall provisions in private equity funds and carried interest distributions to fund managers and among their personnel, as well as related clawback and allocation provisions. The program will also examine the tax implications of such provisions.
Waterfall provisions governing distributions are one of the most critical components of the relationship between a private equity fund sponsor and its investors. These provisions affect the amount and timing of the return of investor capital, the return on investor capital and the sponsor’s receipt of carried interest distributions. There are several variations that can significantly affect the economic results for investors and the sponsor.
In addition to variations in distribution waterfalls, other important considerations in drafting fund economic provisions include: (1) the tax implications of the distribution waterfall and the income and loss allocations; (2) tax distribution provisions to address phantom income; and (3) clawbacks that allow investors to recoup carried interest distributions to the sponsor under certain circumstances.
All of these considerations have corresponding implications at the fund sponsor level. Sharing of carried interest among sponsor personnel is a key aspect of incentive compensation arrangements for fund managers. Variations in these sharing arrangements require careful drafting and planning.
Listen as our authoritative panel discusses structuring waterfall provisions, carried interest distributions, carried interest sharing options at the sponsor level, clawbacks and allocation provisions for private equity funds and their sponsors, as well as the tax implications of such provisions.
- Typical waterfall variations and their economic implications for investors and the sponsor
- Carried interest clawbacks
- Carried interest sharing arrangements at the general partner level
- Tax ramifications, allocation provisions and tax distributions
The panel will review these and other key issues:
- What are the typical approaches for structuring a private equity fund distribution waterfall?
- How do these variations affect the timing of carried interest distributions to the sponsor?
- What are some of the approaches to sharing carried interest at the sponsor level?
- How can counsel address phantom income concerns for the sponsor?
This is an encore presentation with live Q&A.
After completing this course, you will be able to:
- Indicate typical approaches to structure a private equity fund waterfall
- Discern tax and economic implications of private equity fund waterfall for investors and sponsor
- Recognize approaches to sharing carried interest at the sponsor level
- Identify tax ramifications of clawback and allocation provisions for private equity funds and their sponsors
Chris P. Kallos, Partner
Kirkland & Ellis,
Mr. Kallos is a corporate partner who is recognized internationally as one of the top attorneys in the area of private investment fund formation and management. As a leader of the firm’s Private Funds Group, he has been instrumental over the course of two decades in developing the firm’s industry-leading global practice. Mr. Kallos leads fund formation matters for large and middle-market buyout, growth equity, debt, secondary, venture, technology, real estate and other funds, and advises his private equity clients on a wide variety of related matters. He is a frequent speaker and panel moderator in the U.S. and internationally on private equity fund-related matters.
Daniel P. Meehan, Partner
Kirkland & Ellis,
Mr. Meehan is a tax partner in the Chicago office of Kirkland & Ellis LLP. His practice focuses on the tax aspects of forming private equity funds, credit and other debt funds, hedge funds and venture capital funds, the tax issues specific to both fund sponsors and investors, and the tax aspects of private equity transactions, mergers and acquisitions. He has extensive experience advising clients with respect to the tax aspects of partnerships, LLCs and S corporations, as well as nonqualified and equity-based compensation arrangements.
Enrolled Agent credit processing is available for an additional fee per person.
EA Processing $5.00
CLE On-Demand - Streaming Video
Note: Self-study CPE and EA credits are not offered on this On-Demand webinar.
Includes recorded streaming video of full program plus PDF handouts.
On-demand is the only recorded format recognized for CLE credits in DE, IN, KS, LA, MS, NC, OH, OK, SC, TN, VA, WI.
AK, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN*, KS, KY, LA, ME, MN, MO, MT, NC, ND, NH**, NJ, NM, NV, NY, OH*, OK, OR, PA, SC, TN, TX, UT, VA, VT, WA, WI, WV, WY (Note: Some states restrict CLE eligibility based on the age of a program. Refer to our state CLE Map for additional information.)
*Only available for attorneys admitted for more than two years. For OH CLE credits, only programs recorded within the current calendar year are eligible - contact the CLE department for verification.
**NH attendees must self-determine if a program is eligible for credit and self-report their attendance.
CLE On-Demand Video $297.00
Available 48 hours after the live event
Includes full event recording plus handouts (available after live webinar).
Note: Self-study CPE and EA credits are not offered on recorded events.
Strafford is an approved provider and self-study CLE credit is available in most states.
AK, AZ, CA, CO, CT, FL, GA, HI, IA, ID, IL, KY, ME, MN, MO, MT, ND, NJ, NM, NY, OR, PA, TN, TX, UT, VT, WA, WV, WY (Note: Some states restrict CLE eligibility based on the age of a program. Refer to our state CLE Map for additional information.)
Strafford will process CLE credit for one person on each recording.
Additional copies of a recording can be purchased at a discount. Please call Strafford Customer Service toll-free at 1-800-926-7926 ext 10 or email email@example.com to place your order.
Recorded Webinar Download $297.00
Available 48 hours after the live event
Recorded Audio Download (MP3) $297.00
Available 24 hours after the live event
DVD (Slide Presentation with Audio) $297.00
plus $9.45 S&H
Available ten business days after the live event
NASBA CPE Sponsor
Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.
IRS Approved Provider
Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
CLE Credits By State
Strafford is a NASBA CPE sponsor and our live webinars qualify for CPE credits. They offer you a high quality, cost effective, and convenient CPE option, with no lost travel time or expenses.
I liked the substance of the program and the ease of participating.
Paul L. Hammann
First American Title Insurance Company
I liked that the program had a lot of exchange of practical advice and was very interactive among the speakers.
Robinson Sheppard Shapiro
The speakers were very well informed and knowledgeable.
Morrison & Foerster
The webinar was very thought provoking and I learned a great deal.
I was pleased with the programs practicality and the hands-on knowledge of the speakers.
Winthrop & Weinstine
Banking & Finance Law Advisory Board
Alston & Bird
Orrick Herrington & Sutcliffe
Stradley Ronon Stevens & Young
Strafford webinars are backed by our 100% Unconditional Money-Back Guarantee: if you are not satisfied with any of our products, simply let us know and get a full refund. For more information regarding complaints and refunds, please contact us at 1-800-926-7926 ext 10. Complaints regarding this program can be submitted via the course evaluation found in the “Thank you” e-mail at the end of the course.