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If it's unvested, you lose it if you leave, whether it's voluntarily or not. As for vesting, I'm seeing longer vest period and I think it's a function of how the industry has moved toward longer hold periods. So I think it's now common to see equal vesting over 7 or even 8 years, while previously the standard would have been 5.
Generally agree with that assessment although each GP differs significantly in terms of how they structure their compensation plans to align with long-term retention of investment professionals. Some firms find the right balance here while others do not. If by "pushed out" you mean just a single person being fired then yes, you lose the unvested amount and it is typically re-distributed to the remaining team. If the GP in question is "pushed out" (i.e., No-Fault Termination), then the GP would generally take a haircut to the carry owed to them (80%, for instance) so that a new carry pool can be allocated to the incumbent GP.
Thanks for the replies. The scenario I'm referring to is just a case where you have a say 7 year vesting period coming in as a VP, but you failed to make Principal and is asked to leave 3 years in. Sounds like in that case you would still essentially lose the majority of your carry assuming evenly vested throughout the 7 years.
Not qualified to answer, however I believe it would follow the "haircut" example mentioned by Secondary.
You lose all unvested carry when you leave. In your example, assuming straight-line vesting, you would still come away with 3/7ths of your allocation in the fund's carried interest. This is of course provided you don't go out as a bad leaver which typically means you lose all carry.
Here's one data point - my vesting period was 5 years, straight line. Similar to equity, when you leave, you typically don't have any rights to the unvested portion, it just goes back into the carry pool (nominally to the main partners but usually it just gets allocated again for future hires).
If you are only talking about being asked to leave because you didn't make the cut to principal or partner then you will generally be awarded the carry you have vested and in most cases a refund of your proportional invested amount if you put in your own capital with interest. However this completely goes out the window if the firm is acquired and you are forcibly removed. In those cases smart lawyers will bake in a double trigger and you will vest 100% of your ownership/carry. It prevents acquiring firms for buying a company to strip it to the bone and assume the IP in a structured way that gets them off the hook for actually paying for it.
Can you explain what a double trigger is? Thanks
Is straightline carry definitely the norm? Friend was talking the other day about how his fund, you don't even start having carry vested for 4 years, then it vests over years 5-8.
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