The Preferred Return is the contractual minimum return that limited partners must receive from fund distributions before the general partner earns carried interest, typically expressed as an annual percentage (e.g., 8%), subject to the fund’s waterfall structure. In fund terms, Preferred Return is intended to align incentives and protect LPs, and Preferred Return mechanics interact with catch-up provisions, distribution timing, and clawbacks.
Ryan RobertsStartup Lawyer
Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration.
