Clawback
Private Credit glossary · Fund Structures, Returns & Economics
Definition
Provision requiring the GP to return excess carry distributions.
Clawback in plain English
When a private fund makes money, the managers (the GP) get a cut of the profits called 'carry.' But those profits get paid out deal by deal, over years — so early winners might hand the managers a bonus before later losers drag the fund's TOTAL return back down. A clawback is the rule that says: if you got paid too much along the way, you have to give the extra back so you only ever keep your fair, agreed-upon share of the final result. It's like a waiter who's tipped after each course but has to refund part of it if the meal, judged as a whole, ended up disappointing.
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