10.2.4.d: Private Equity Limited Partnerships: Distribution Drive System vs. Allocations cum Distributions

Contributing Editor: Joseph W. Bartlett of Sullivan & Worcester LLP

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Abstract

Herewith a comparison of what I call the "distribution drive" regime for conflating allocations and distributions in a typical private equity fund with the more pedestrian system of specifying how the allocations work and then, in a separate article in the LPA, specifying how distributions are to be made. The 'distribution drive' system originated at the urging of Phil Pool at Merrill, who (we are told by Bill Hewitt at Ropes & Gray, an expert on distribution drive) felt that treating allocations and distributions in distinct paragraphs engendered unnecessary confusion for investors.