Carried Interests - The essentials

Alternative investment funds remunerate their investment managers with a share of realised gain on their private equity investments on the basis of a required performance benchmark. Carried interest (partnership allocation) is considered as a tool to align the interests of both investors and investment managers.

Calculation methods are driven by funds' private agreements and as some clauses or special considerations are unique to each fund, it is essential to understand the pitfalls and issues linked to its measurement.

PwC’s Academy is pleased to offer a training dedicated to understanding the main principles of the carried interest calculation.

By the end of this training, the participants will be able to:

• understand the different methods/models of carried interest calculation;
• identify the potential issues and monitor the risks linked to specific clauses in the carried interest specifications.

• Definition of main carried interest concepts and structure:
  • Principles of waterfall allocation
  • Hurdle rate and IRR calculation
  • Determination of preferred return and catch-up
• Modelling of carried interest waterfalls
• Description of unusual specific clauses and their calculation impact:
  • Deal-by-deal models
  • Claw-back and escrow clause
  • Variable hurdle and catch-up rates

This training is coordinated by Christophe Szymkoviak, Partner and Chistopher Yan, Senior manager at PwC Luxembourg.

Christophe is a partner in the Assurance department, and he is specialised in the asset management industry and more specifically in private equity funds and structures.

Christophe is an instructor for PwC employees and clients in the private equity industry.

Christopher is a senior manager in audit and Assurance with a specialisation in private equity, and a member of the Association of Chartered Certified Accountants since 2022.

With more than 10 years of experience in external audit, Christopher has developed a deep expertise in the private equity sector, demonstrating proficiency in Lux GAAP, IFRS, and US GAAP. His extensive experience spans both regulated and unregulated structures within Luxembourg's financial landscape.