Carried Interest Ownership Definitions

In a carried interest agreement, you provide details to generate a carried interest ownership definition which contains ownership percentages for the consenting stakeholders only. These details include:

• A stakeholder group, which includes each consenting stakeholder and nonconsenting stakeholder and the percentage of the nonconsenting stakeholder’s interest that each consenting stakeholder is carrying.

  For example, you can have a stakeholder that's carrying 100% of another stakeholder’s interest, two stakeholders that are each carrying 50% of another stakeholder’s interest, and so forth.

• A source ownership definition, which can include one or more ownership definitions that contain the ownership percentages for the stakeholders prior to the carried interest agreement.

The application uses these details to generate a carried interest ownership definition with each consenting stakeholder’s percentage increased in proportion to their share of the nonconsenting stakeholder’s interest.

You can use a carried interest ownership definition in these joint venture configurations: joint venture definition, ownership definition assignment rule, overhead method, or partner contribution request. When the setup is complete, you can process joint venture transactions and generate the following distributions:

• Standard distributions to bill and pay the consenting stakeholders for their share of costs and revenue, which includes the share that they're carrying for nonconsenting stakeholders.

• Carried interest distributions to track the carried interest.

  Carried interest distributions are created for all transactions that were distributed according to the carried interest agreement. For reporting purposes, you can export carried interest distributions to a spreadsheet to track the amounts consenting stakeholders carry for nonconsenting stakeholders.

  Carried interest distributions aren’t invoiced. However, in a carried interest agreement, you have the option to identify consenting stakeholders for which you want to create carried interest journals. This pertains only to consenting stakeholders that are internal stakeholders. Its primary purpose is to track the costs and revenue that a joint venture operator is carrying for nonconsenting stakeholders, but you can also perform the setup for an internal stakeholder that is a nonoperator. See Create Carried Interest Journals for more information.