Structuring Waterfall Provisions in LLC and Partnership Agreements
Navigating Complex Distribution Structures, Minimizing Negative Tax Consequences
Recording of a 90-minute premium CLE/CPE video webinar with Q&A
This CLE/CPE course will guide corporate and tax counsel on the various methods of structuring waterfall distribution provisions in LLC and partnership agreements. The panel will examine a variety of economic and tax considerations such as timing and types of distributions (including tax distributions), approaches to drafting priority returns (internal rate of return vs. preferred return), carried interest/promote calculations, capital shifts, relationships between distribution and allocation provisions, and the interaction of IRS partnership audit rules and distribution waterfalls.
Outline
- Waterfall provisions, generally
- Determining/drafting waterfall provisions
- Understanding the economic arrangement of parties
- Tailoring accounting and tax provisions
- Implications of IRS partnership audit rules
Benefits
The panel will review these and other key issues:
- 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 LLC or partnership agreements?
- What are pitfalls to avoid when tailoring partnership allocation provisions to waterfall provisions?
- What are the implications of IRS partnership audit rules for tiered waterfall distributions?
Faculty
James R. Browne
Partner
Barnes & Thornburg
Mr. Browne advises clients on the U.S. income tax aspects of domestic and international business transactions and... | Read More
Mr. Browne advises clients on the U.S. income tax aspects of domestic and international business transactions and matters involving federal, state and foreign taxes. With more than 35 years of experience, he handles complicated tax and financing issues for a diverse range of clients. He has experience advising sellers and purchasers on tax aspects of business acquisitions involving both strategic and financial purchasers, preparing tax disclosures for debt and equity offering documents, advising clients on tax aspects of forming, funding, and reorganizing corporate and partnership entities, and advising clients on tax and financing aspects of international operations.
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Phyllis A. Schwartz
Partner
Schulte Roth & Zabel
Ms. Schwartz focuses her practice on the structuring, formation and operation of private equity funds, including buyout... | Read More
Ms. Schwartz focuses her practice on the structuring, formation and operation of private equity funds, including buyout funds, venture capital funds, mezzanine funds, distressed funds and real estate funds. She represents both fund sponsors and investors in her practice. In addition to assisting fund sponsors with their internal management arrangements, succession planning and the creation of internal investment and co-investment vehicles, she has extensive experience with institutional investors and regularly advises clients on market terms of investment funds. She also advises private equity funds in connection with their investments in, and disposition of, portfolio companies and the establishment of capital call credit lines.
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