Perform Carried Interest Reversals Due to a Retroactive Change in Ownership

The following scenarios require the retroactive reversal and redistribution of distributions generated for a carried interest agreement:

• A renegotiation of a joint venture ownership that results in a change to the partners and ownership percentages.
• A renegotiation of a carried interest agreement that results in a change to the percentages of interest that each consenting stakeholder is carrying for a nonconsenting stakeholder.

For a renegotiation of a joint venture ownership, you need to update the ownership details in both the carried interest agreement and the joint venture definition. The following table describes how to perform these updates and process the reversals.

Task	Details
In the carried interest agreement, change the end date of the existing stakeholder group.	Change the end date in the stakeholder group so that it’s one day prior to the date in which the renegotiated ownership takes effect. Saving the end date in the stakeholder group automatically updates the end date in the carried interest ownership definition.
In the carried interest agreement, create a new stakeholder group.	Name it with the same name as the existing stakeholder group and enter an effective start date that immediately follows the end date of the existing stakeholder group. Enter the percentage of interest that each consenting stakeholder is carrying for a nonconsenting stakeholder. Note: You can’t generate a carried interest ownership definition for the stakeholder group until you create a source ownership definition for it in the joint venture definition.
In the joint venture definition, change the end date in the existing source ownership definition.	The end date must match the end date of the stakeholder group in the carried interest agreement. The adjustment process will use the updated effective dates in the ownership definition to reverse distributions associated with transactions that are no longer within the dates.
In the joint venture definition, create a new ownership definition according to the renegotiated ownership terms.	Make sure to name it with the same name as the existing ownership definition. Make sure that the effective start date matches the start date of the new stakeholder group that you just created.
In the carried interest agreement, generate a carried interest ownership definition for the new stakeholder group.	Name the new carried interest ownership definition with the same name as the existing carried interest ownership definition. For the source ownership definition, select the new ownership definition that you created in the preceding task.
Run the processes to perform the reversals and generate the redistributions.	The processes reverse and redistribute both the standard distributions and the carried interest distributions. See Run the Adjustments Process to Create Reversed Distributions and Redistributions for detailed steps.

For a renegotiation of the carried interest agreement, you only need to update the carried interest agreement. The following table describes how to update the carried interest agreement and perform the reversals.

Task	Details
In the carried interest agreement, change the end date of the existing stakeholder group.	Change the end date in the stakeholder group so that it’s one day prior to the date in which the renegotiated percentages of carried interest take effect. Saving the end date in the stakeholder group automatically updates the end date in the carried interest ownership definition.
Create a new stakeholder group.	Name it with the same name as the existing stakeholder group and enter an effective start date that immediately follows the end date of the existing stakeholder group. Enter the renegotiated percentages of interest that each consenting stakeholder is carrying for a nonconsenting stakeholder.
Generate a new carried interest ownership definition.	Generate a new carried interest ownership definition for the new stakeholder group. Make sure to name it with the same name as the existing carried interest ownership definition. For the source ownership definition, select the same source ownership definition that’s used for the existing carried interest ownership definition.
Run the processes to perform the reversals and generate the redistributions.	The processes reverse and redistribute both the standard distributions and the carried interest distributions. See Run the Adjustments Process to Create Reversed Distributions and Redistributions for detailed steps.