Joint-and-several vs several liability
Last updated
Quick Answer
Joint-and-several liability makes each carry recipient answerable for the whole clawback; several liability limits each to their own share.1,2
What it is
Under a several formulation, a limited partner seeking repayment must pursue each individual recipient for their portion, and a departed or insolvent individual's share may simply be uncollectable. A joint-and-several formulation makes the obligation recoverable from whoever remains. It is one of the clearest tests of whether a clawback was drafted to be enforced.1,2
Operational context
What good looks like
Why It Matters
This single choice decides whether a limited partner pursues one solvent counterparty or a scattered list of former employees, and it is the clearest signal of whether the clawback was drafted to be enforced.1
Term Family
Related concepts
Frequently Asked Questions
What is Joint-and-several vs several liability in venture capital?
Under a several formulation, a limited partner seeking repayment must pursue each individual recipient for their portion, and a departed or insolvent individual's share may simply be uncollectable. A joint-and-several formulation makes the obligation recoverable from whoever remains.
Why is Joint-and-several vs several liability important for startups?
Understanding Joint-and-several vs several liability is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Sources & References
- 1.ilpa-principles-3 — ILPA Private Equity Principles 3.0 (2019)ILPA Private Equity Principles 3.0 (2019)ILPA(Joint-and-several liability makes each carry recipient answerable for the whole clawback; several liability limits each to their own share.)primary · T1 · vesting-clawback · term
- 2.duanemorris-clawbacks — Private Equity Funds: Clawbacks and Investor GivebacksPrivate Equity Funds: Clawbacks and Investor GivebacksDuane Morris LLP(Joint-and-several liability makes each carry recipient answerable for the whole clawback; several liability limits each to their own share.)secondary · T2 · vesting-clawback · term
Newsletter
CarryBeast Brief
Carry math, waterfall tiers, and incentive design. Every Tuesday.
CarryBeast Brief
The weekly brief on carry and fund economics
Weekly analysis of waterfall structures, promote splits, and incentive design across private funds. Every Tuesday, free.
Archstone
Run your fund like an institution.