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The Definitive Guide to Carried Interest

US$ 699.00

Key Information

  • ISBN: 978-1-911316-08-4
  • Publication Date: September 2017
  • Number of Pages: 313

This groundbreaking title by Mariya Stefanova of PEAI is packed full of guidance and best practice approaches that will demystify the subject, help practitioners peel back the layers of the calculation, and aid understanding.

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Best practices for GPs, LPs and their advisors

One of the most complex issues in private equity, carry has been the subject of intense political debate and wider public scrutiny in recent times. The mechanics of the waterfall calculation, with its multiple components, is also the source of much misunderstanding and confusion for both GPs and LPs, making it difficult for LPs to validate the GP-reported carry.

The Definitive Guide to Carried Interest is a groundbreaking title by Mariya Stefanova of PEAI packed full of guidance and best practice approaches that will demystify the subject, help practitioners peel back the layers of the calculation, and aid understanding.

This essential guide contains:

  • An easy step-by-step guide to the waterfall calculation
  • Best practices for modelling carry
  • A comprehensive guide to accounting and reporting considerations
  • An overview of changes to the tax treatment of carry in the UK
  • Thoughts from a leading academic on a new carry mechanism for GP/LP alignment; plus much more

Who should buy this book

  • GPs
  • CFOs
  • COOs
  • Fund controllers
  • Fund accountants
  • LPs
  • Fund administrators
  • Lawyers

About Mariya Stefanova

Mariya Stefanova is a founding partner of PEAI, a private equity consultancy and training firm. Since 2015, Mariya’s focus has shifted towards carried interest/fee verification for LPs and waterfall model validation/certification for GPs.

She has more than thirteen years experience in private equity accounting and investor reporting, and over nine years experience training thousands of fund accountants, CFOs, COOs and other senior executives on the GP, LP and the service providers side.

She is also the author of Private Equity Accounting.

- Mariya Stefanova, PEAI

- Christopher Good, Macfarlanes LLP

- James McCredie and Alicia Thomas, Macfarlanes LLP

- Tarek Mardini and Ronald Buge, P+P Pöllath + Partners

- Andrew Ahern, Debevoise & Plimpton LLP

- Gert-Tom Draisma, Tristan Finance

- Joe Greenwell and JP Harrop, Augentius

- Simon Havers, Odgers Berndtson Executive Search

- Tom Pittman and Robert Hagmeier, EWM Global

- Jennifer Choi, ILPA

- Lorelei Graye, Consultant

- Charles Dooley, AcordIQ

- Oliver Gottschalg

- Luba Nikulina, Willis Towers Watson

- Institutional Limited Partners Association (ILPA), June 2017

About the author


SECTION 1: An Introduction to Carried Interest

1 Carried interest — The ‘captain’s share’

SECTION 2: Structuring Carried Interest: Tax and Legal Issues

2 Structuring carried interest: Legal considerations

3 Taxation of carried interest in the UK

4 Tax and legal treatment of carried interest in Germany

5 Carry tax and legal treatment: Country snapshots

6 Corporate and commercial trends in carried interest terms

SECTION 3: Best Practice for Fund Managers

7 The waterfall calculation: From the lawyer’s drawing board to the back office desk

8 Best practices for modelling carried interest

9 Scoring GP waterfall models

10 Carried interest: Accounting and reporting considerations

11 Using technology to calculate and recognise carried interest on the GP side

SECTION 4: Subscription Lines of Credit and their Impact on Carried Interest and IRR

12 Capital call bridge facilities: Impact on investment performance and carried interest

13 How subscription lines of credit can ‘disturb’ the net IRR and TWR, and accelerate carry

SECTION 5: Carried Interest as an Incentive Mechanism

14 Carried interest as an incentive mechanism: Advantages and disadvantages

15 Carried interest employee incentive structures

SECTION 6: LP Perspectives

16 How LPs view the role of carry in GP/LP alignment

17 Case Study In pursuit of transparency and digital reporting: The LP experience

18 Carry validation: Why and what are the options available to LPs?

19 How new technology is enabling LPs’ to verify GP-reported carry

SECTION 7: Rethinking Carry

20 Towards a new carry mechanism for aligning interests

21 Rewarding true value creation in private equity: Implications for LPA economic terms

Appendix — Subscription lines of credit and alignment of interests: Considerations and best practices for limited and general partners

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