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 Déborah Prijot, Partner and Christopher Yan, Senior Manager at PwC Luxembourg.

Déborah is a partner in the audit department. Since joining PwC in 2005, she has gained experience in different industries. In particular, she has developed strong skills in auditing alternative investment funds (including debt funds, infrastructure funds and fund of funds).

She is actively supporting PwC Luxembourg 's alternative group. She currently focuses on private equity clients through the audit of several private equity funds and structures organised under various legal forms.

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.