Not only do the terms of private credit funds differ materially from typical PE and venture capital (VC) funds in key ways, but those terms are constantly evolving as the asset class matures and adjusts to macro developments. To that end, Proskauer recently hosted a webinar featuring partners Caryn J. Greenspan, Nicholas “Carter” Noon, Chip Parsons and Daniel J. Paulos that examined five key areas credit fund managers are focusing on that may be approached differently from PE and VC funds. This first article in a two-part series details the latest developments in how credit fund managers are tackling management fee base calculations, embracing evergreen fund structures and overcoming tax complications when funds have tax sensitive investors. The second article
will describe issues to address when operating levered and unlevered parallel funds; the merits of various subsequent close models (e.g.
, cost-plus-interest); and nuances of applying recycling and recall provisions in the private credit context. For further insights from Proskauer, see our two-part series: “Liquidity Solutions Pursued by Sponsors in a Harried Fundraising and Deal Environment
” (Jan. 25, 2022); and “Latest Market Standards of Economic and Liquidity Terms in LPAs Amid the Recent PE Fundraising Boom
” (Feb. 1, 2022).