🇦🇪UAE

عدم الدقة في حساب حصة الشريك العام (GP Carry Misallocation & Clawback Risk)

Updated: Feb 20263 verified sources

Definition

GP carry calculation error scenarios: (1) Catch-up calculation error—spreadsheet formula miscalculates when GP carry equals negotiated % (e.g., 20%), causing carry to flow to GP beyond catch-up threshold; (2) Multi-exit sequencing error—carries from Deal A and Deal B calculated separately (deal-by-deal) when fund-level test required (European waterfall), resulting in overpayment; (3) Rounding errors—cumulative across 15–20 exits, creating AED 500K–2M+ carry discrepancies. Clawback provisions exist but are difficult to enforce once cash distributed; ILPA stresses no carry should flow from assets still underwater at fund level.

Key Findings

Financial Impact: AED 100,000–500,000 per fund annually: (a) Carry disputes requiring legal review and re-calculation: AED 30,000–80,000 in legal fees. (b) Clawback enforcement cost (if pursued): AED 50,000–150,000 in litigation (rarely fully recoverable). (c) LP trust loss and future fund fundraising impact: 5–10% reduction in follow-on fund size (AED 200K–500K opportunity loss). (d) Estimated carry over-payment (before correction): AED 250K–1M per dispute (varies by exit size).
Frequency: 1–3 carry disputes per fund per fundraising cycle (3–5 year fund = 3–15 disputes total).
Root Cause: Manual spreadsheet formulas lack robust error-checking; no automated audit trail to verify carry percentage was hit at correct waterfall tier; missing segregation of deal-by-deal vs. fund-level carry calculations.

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Venture Capital and Private Equity Principals.

Affected Stakeholders

Fund Manager (GP), Fund Accountant, Chief Financial Officer, LP Relations Manager, Legal Counsel

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

عدم الامتثال لمتطلبات معايير المحاسبة والإفصاح (Non-Compliance with Fund Accounting & Disclosure Standards)

AED 50,000–250,000 annually per fund: AED 30,000–80,000 in DFSA audit remediation and external auditor fees (typical 2–3 additional audit cycles); AED 20,000–50,000 in legal review and LP communication costs; AED 10,000–30,000 in potential DFSA penalties for late filings. Larger funds (AED 1B+) face AED 150,000–500,000+ in lost fundraising momentum due to compliance reputation impact.

تأخير توزيع العائدات على المستثمرين (Delayed LP Distributions & DPI Drag)

AED 200,000–1,000,000 annually: (a) LP opportunity cost: Assume AED 5B average fund size, 10 exits/year, AED 50M avg exit proceeds per deal; 45-day delay @ 6% annual opportunity cost = AED 37,500 per exit × 10 = AED 375,000/year. (b) DPI lag impact: 2–3% lower DPI metrics translate to 10–15% lower follow-on fund commitments (AED 500M follow-on fund × 12.5% = AED 62,500 lost capital). (c) LP churn: 5–10% redemption risk from large LPs due to slow distributions = AED 200,000–500,000 in lost AUM.

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