Subsequent closes and equalization
Bringing late investors level with early ones, accurately.
What happens at a subsequent close?
New LPs contribute their pro-rata share of capital already called (and their share of fees and expenses), usually plus an interest charge; earlier LPs receive back the excess they funded, so everyone is in the position they would have been in had they joined at first close.
The calculation
Compute the new LP's share of each prior call, apply the LPA's interest rate for the period, and true up management fees from the first close.
Where the money goes
Equalization payments are typically returned to earlier LPs; interest may go to earlier LPs or to the fund, as the LPA specifies.
Reporting
Earlier LPs see a reallocation and a distribution; new LPs see a contribution. Both need clear notices.
Questions
Does FUN/D automate equalization?
Yes, at each subsequent close.
Want to see this on your own fund?
Name and work email. A person replies within one business day, usually with times for a demo on a structure like yours.
Talk to us
Name and work email. We reply within one business day, from a person.
Sent.
Someone from FUN/D will email you within one business day. If it's urgent, call +1-212-658-0862.