Being seeded can undoubtedly jumpstart a manager’s business. Not only does a seed investment allow the manager to launch with a sizeable asset base, but the seed deal itself signals to the industry that the seed investor views the manager as likely to succeed. Both factors often facilitate the manager’s efforts to raise additional capital from institutional investors. For this reason, newly formed managers routinely compete to secure seed deals. All these points were explored in a recent study conducted by Seward & Kissel (S&K). This second article in our two-part series discusses the study’s findings with respect to key seed-deal terms, including participation, capacity, most favored nation and consent rights; transparency terms; and the pros and cons of buyout rights for managers. The first article discussed the current seeding environment, as well as how seeders structure their investments, key-person covenants and lock-up provisions. This article also includes insights from S&K partner Gary Anderson, lead author of the study. For more on negotiating seed deals, see “KKWC and EisnerAmper Panel Details Benefits, Tax Considerations, Common Structures and Terms of Seed Deals” (Jan. 26, 2017); “Participants at Eighth Annual Hedge Fund General Counsel Summit Discuss Terms With Institutional Investors, Seeding Arrangements and the Convergence of Mutual Funds and Hedge Funds (Part Four of Four)” (Feb. 19, 2015); and “Report Offers Insights on Seeding Landscape, Available Talent, Seeding Terms and Players” (Jan. 8, 2015).