Glossary
Carry escrow
A holdback of part of the carried interest paid to the GP, kept in reserve to fund any future clawback obligation.
In practice
Escrow percentages (often 20–30% of carry) and release conditions are set in the LPA. Escrow balances must be tracked per fund and released or applied when clawback tests are run.
In FUN/D
FUN/D tracks escrow balances against the potential clawback liability per fund.
Related: Clawback · Carried interest · American waterfall · full glossary
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