For an investment team to successfully spin out from an established PE firm, it is important for the parties to retain a symbiotic, ongoing relationship. The seed capital and early infrastructure offered by a legacy firm can allow a spinout entity to thrive, with benefits inuring to the prior firm through the negotiated revenue sharing agreement. If that relationship is handled clumsily, however, or the spinout principal is ill-prepared for the rigors of operating the new entity, then a once-promising spinout can end in disaster. This third article in a three-part series details some of the economic and operational terms negotiated as part of the ongoing relationship between the two entities, as well as certain post-spinout complications that arise. The first article explained what PE spinouts are, why parties pursue spinouts and what factors impact the timeline for a spinout. The second article explored some obstacles that legacy firms and principals need to navigate to complete a spinout, including as to track record portability and non-solicitation clauses. See our two-part series on seeding arrangements: “How a Manager Can Optimize Its Infrastructure to Attract a Seeder” (Sep. 22, 2020); and “Finding the Right Seeder/Manager Rapport and Tips for Luring Other Prospective LPs” (Sep. 29, 2020).