Interested in training for your team? Click here to learn more

Private Equity Waterfall and Carried Interest Provisions: Economic and Tax Implications for Investors and Sponsors

Distributions, Clawbacks, and Allocations; Carried Interest Sharing; Drafting to Address Tax Consequences

Note: CPE credit is not offered on this program

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

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, November 28, 2023

Recorded event now available

or call 1-800-926-7926

This CLE course will analyze various alternatives to structure waterfall provisions in private equity funds, carried interest, and related clawback and allocation provisions. The program will also examine the tax implications of such provisions.


Waterfall provisions governing distributions are a critical component of the relationship between a private equity fund sponsor and its investors. These provisions impact the amount and timing of the return of investor capital and the sponsor's receipt of carried interest distributions. Several variations can significantly affect the financial results of investors and the sponsor.

Other important considerations in drafting fund economic provisions include: (1) the tax implications of the distribution waterfall and 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.

These considerations have corresponding implications at the fund sponsor level. Sharing of carried interest among sponsor personnel is a crucial 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, and clawbacks and allocation provisions for private equity funds and their sponsors, as well as the tax implications.



  1. Typical waterfall variations and their economic implications for investors and the sponsor
  2. Carried interest clawbacks
  3. Carried interest sharing arrangements at the general partner level
  4. 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 impact the timing of carried interest distributions to the sponsor?
  • What are some of the approaches to sharing carried interest at the sponsor level?


Marrs, Nathaniel
Nathaniel M. Marrs

Willkie Farr & Gallagher

Mr. Marrs is a partner in Willkie’s Chicago office, where he is a member of the Asset Management Department and...  |  Read More

Virmani, Aalok
Aalok Virmani

DLA Piper

Mr. Virmani advises investment fund sponsors on federal income tax matters. In particular, he focuses on the domestic...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video