Private Markets

Clawback

Definition

What is Clawback?

A provision requiring a manager to return excess carried interest if later losses make earlier payments too large.

Example in practice

The GP repays carry after a failed late investment reduces total fund profit.

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Investment in privately held companies, often with active ownership and a multi-year exit plan.

Equity financing for young, high-growth companies with substantial uncertainty.

An individual who invests personal money in early-stage companies.

A preliminary document outlining the main commercial terms of a proposed investment.

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