A profits interest is a partnership interest (such as an LLC) that gives the owner the right to receive a percentage of future profits (but not existing capital) from the partnership. Thus, holder of a profits interest will receive a return on their interest only after a certain threshold of distributions to current LLC members is completed.
ACCELERATE YOUR STARTUP LAW KNOWLEDGE!
Startup Law doesn’t have to be a confusing maze. The practical knowledge in "Acceleration: What All Entrepreneurs Must Know About Startup Law" will help you make the smart decisions to protect your startup and its future. Available in ebook and hardcover.
Buy the Book on Amazon