Clawback Provisions in Private Equity Fund Structures

A clawback is when GPs are required to pay back a portion of their profit share to LPs if it turns out they have been overpaid.

Escrow arrangements are temporary lock boxes where carry is held until a fuller picture of a fund’s performance is known, in order to avoid clawback scenarios.

Transaction fees are fees charged by GPs to their own portfolio companies for services rendered. Venture capital firms rarely charge deal fees.

<p>Non-legally binding indications of potential capital to be raised.</p> Signup and view all the answers

<p>Hedge funds focus on short-term returns while private equity focuses on long-term profits.</p> Signup and view all the answers

<p>Investors in private equity commit capital to be invested, while investors in hedge funds invest their money in one go.</p> Signup and view all the answers

<p>Private equity investors are generally charged 2% as a management fee along with 20% as an incentive fee. For Hedge fund investors, the fee is based on the concept of a high-water mark.</p> Signup and view all the answers

<p>Hedge funds tend to be riskier as they focus on earning high returns on short time frame investments.</p> Signup and view all the answers

<p>Hedge funds are typically open-ended investment funds with no restrictions on transferability. Private equity funds, on the other hand, are typically closed-ended investment funds with restrictions on transferability for a certain time period.</p> Signup and view all the answers