General partners often agree to provide some annual rate of return to investors before taking their share of profit, giving limited partners additional security that they won’t end up in a clawback situation. (Hellman & Friedman and Warburg Pincus famously don’t offer priority returns.) This has become especially true for North American buyout firms, where over three-quarters have them, according to Buyouts Insider’s “PE/VC Partnership Agreements Study” for 2016-17. While priority returns are less popular in venture funds, both internationally and domestically, their numbers are up from when we last conducted a similar survey two years ago.
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