Exit Terms for Carry and Fund Interest
What do people normally see offered on their vested carry and funded GP commitment when they resign from a firm?
Being asked to sell back my fund interest at face value of my capital contributions (valuation has appreciated a lot since date of investment). On vested carry, they are saying I keep the right to earn that - it just stays in place until carry is earned on the fund at which point I receive a distribution. Just interested in what market terms are.
Sounds normal
GP commit should be more reliable and either you stop funding new investments or usually keep paying capital calls.
Carry is where the fun and games usually starts. Good leaver / bad leaver provisions
Carry remains in place so that’s fine.
For GP commitment, LPA states I keep paying capital commitments unless I was terminated with cause (I wasn’t, I resigned). They’re now asking to buy back my interest in the fund at day 0 value - equal to the capital contributions I funded - and then I would be terminated as an LP. It potentially makes sense from the perspective that the GP commitment is shielded from the mgmt/other fees that non-employee LPs have to pay and I’m no longer an employee, ergo I shouldn’t receive that benefit. It doesn’t make sense to me that I have invested dollars that may have appreciated and would be giving up all that appreciation.
Sounds like they have the right to buy back at cost but agree that either paying you NAV (assuming you are through the J curve) or paying you penalty interest (as late incoming LPs do) would be more equitable.
Not in the carry pool yet but heard my fund has a clawback on 50% of your vested carry if you work for a "competitor". Seems a bit aggressive to me, anyone heard of a similar provision? Also pretty sure we keep any capital invested, but don't fund anything new
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