Full Title: Energy Private Equity And The Specter Of Clawbacks
Author(s): Shubi Arora and Audra White, Akin Gump Strauss Hauer & Feld LLP
Publisher(s): Law 360
Publication Date: November 1, 2014
Full Text: Download Resource
Description (excerpt):
In recent months, managers of private equity funds in the energy sector have been facing a scenario they likely never imagined: having to return millions of dollars of their “carried interest” earnings back to investors.
The investment period for a fund can be several years long, typically between three and five years, but occasionally up to a decade. For this reason, many fund managers structure their funds’ agreements to allow for a “deal-bydeal” (or “American”) distribution waterfall, which allows the fund’s manager to earn its carried interest as each investment is liquidated (or generates revenue), rather than waiting until the end of the fund’s term or until investors have received their invested capital back.