Divisions of Private Equity and Hedge Fund Limited Partnership

Topics to be Included:

• Documents to obtain and how to analyze them: Capital account statements, financial statements of the fund, and ownership agreement.
• Discounts for lack of marketability and lack of control to turn the "fair value" capital account into "fair market value" for valuation and equitable distribution purposes. Sources of discounts: secondary market pricing, discount studies, option pricing method, etc. (This is Settlement Option #1: Valuation and cash buyout).
• Tax-impacting fair market value capital account statements for cash buy-out of non-titled spouse's interest.
• Division in-kind and language to use in settlement agreement. The ownership agreement will typically state that the GP has discretion to approve an in-kind distribution. (This is Settlement Option #2: Division in-kind).
• Division "if, as, and when realized" and language in settlement agreement (constructive trustee) to use in the agreement, including tax nominee language that allows each party to pay their own share of taxes without the parties needing to share tax returns each year. Alternative is to pay non-titled spouse after-tax amounts, and then have a true-up when tax returns are finalized. (This is Settlement Option #3: Distribution if, as, and when realized).

Speakers:

Scott M. DeMarco, MBA, CBA, CVA, CDFA, CPVA, Equitable Value LLC

Peter R. Stambleck. Esq., Mosberg Sharma Stambleck Gross LLP.