How do coinvest and carry work after the person leaves the private equity firm? Know there are clawback clauses etc but if the person leaves the firm after one year of receiving carry and joins a firm in a brand new industry, does the person lose their carry or coinvest?
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Very doc dependent, not sure there's a standard approach. Generally what I've seen is carry that has vested is kept by the person who leaves while unvested carry goes away (I've heard of people forfeiting vested carry but don't believe that is market).
For coinvest usually it's at the firm's discretion to repurchase or allow you to keep it. If they do decide to buy you out it's again different depending on documents whether they can buy you out at cost or if they have to pay you based on the latest valuation. If you had a Fund level commitment, you usually will not have the opportunity to continue coinvesting in new deals (i.e. if you commit $xx to Fund II but you leave when Fund II is only 50% deployed you won't receive any more new deal capital calls so you won't fill the total commit).
Thank you! So if I commit 50% to Fund 2 but leave when it is only 50% deployed, I won’t receive any more capital calls but will I receive a lucrative return on the amount I have already coinvested?
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