In Article 6.4.2 of the Cornerstone LPA about GP's clawback how the 'excess amount' is calculated?
In practice, how is the "Excess Amount" the GP owes back actually calculated and when does this typically get triggered in a fund's life?
- The **“Excess Amount”** is the amount of **carry actually distributed** to the GP/Investment Lead for a given **LP**, minus the **carry that should have been received** for that same LP **after final liquidation**, once all contributions, distributions, and allocations are fully trued up.
- It is calculated **separately per LP**, not on a whole-fund net basis, so one LP’s outcome does not offset another’s.
- It is typically triggered **at or near final liquidation / wind-up**, when the full fund economics are known.
- Under the Cornerstone language, repayment is the **lesser of**:
- the LP-specific **Excess Amount**, and
- cumulative carry previously received for that LP, **on a tax-adjusted basis**.
References:
- https://decilehub.com/base/1-general_questions/163959-cornerstone-lpa-question-what-s-the-practical-difference-between-calculating-the-gp-clawback-on-a-per-lp-basis-versus-on-a-whole-fund-basis
- https://decilehub.com/base/1-general_questions/163615-how-should-emerging-managers-provision-for-the-gp-clawback-when-the-cornerstone-template-has-no-escrow
- It is calculated **separately per LP**, not on a whole-fund net basis, so one LP’s outcome does not offset another’s.
- It is typically triggered **at or near final liquidation / wind-up**, when the full fund economics are known.
- Under the Cornerstone language, repayment is the **lesser of**:
- the LP-specific **Excess Amount**, and
- cumulative carry previously received for that LP, **on a tax-adjusted basis**.
References:
- https://decilehub.com/base/1-general_questions/163959-cornerstone-lpa-question-what-s-the-practical-difference-between-calculating-the-gp-clawback-on-a-per-lp-basis-versus-on-a-whole-fund-basis
- https://decilehub.com/base/1-general_questions/163615-how-should-emerging-managers-provision-for-the-gp-clawback-when-the-cornerstone-template-has-no-escrow