Private Equity Partner Transitions
Exiting a private equity firm for a new opportunity can be exciting and lucrative, as well as highly complicated.
For partners, managing directors, and senior investment professionals, a move is rarely as simple as signing a new offer letter. The decision may involve significant sums of value in carried interest and co-investments, complex vesting schedules, layers of unvested equity, RSUs, bonuses, and deferred compensation, as well as restrictive contractual obligations that limit what you can do next.
Potomac Legal Group’s services are tailored to each professional’s needs. Our lawyers provide employment contract review and negotiation, exit strategy and resignation planning, guidance on compensation and equity disputes, advice on non-compete and non-solicit enforceability, and counsel on confidentiality and trade secret matters. We also serve as ongoing advisors as your career evolves, helping you evaluate new opportunities, promotions, and future transitions with an eye toward both legal protection and long-term strategy.
Our attorneys have significant employment law experience and a practical understanding of private equity economics and firm dynamics. We aim to protect the compensation you have earned and assist in creating a clear path to your next role without unnecessary legal battles or setbacks.
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How Private Equity Transitions Are Different
Private equity transitions are fundamentally different from typical job changes. Senior professionals operate at the intersection of employment law, fund and securities regulation, partnership and LLC structures, and fiduciary duties to investors and portfolio companies.
Your compensation structure is far from standard, often layered with carried interest, co-invest vehicles, management company equity, transaction bonuses, and clawback provisions. Your obligations are similarly complex, arising under employment agreements, partnership or LLC agreements, fund-level documents, and firmwide codes of conduct or compliance policies.
Any prospective employer has its own risk concerns. A new platform may value your industry knowledge, deal experience, and relationships, but it will be wary of inheriting a non-compete lawsuit, trade secret claim, or restrictive covenant litigation. At the same time, your reputation with LPs, co-sponsors, lenders, and portfolio company executives is important. A high-profile dispute with a former firm can follow you for years.
The lawyers at Potomac Legal Group understand these dynamics and structure transitions designed to maximize your upside while minimizing legal and reputational risk.
Protecting Carried Interest, Co-Investments, Equity & Bonuses
Carried interest is often the single most valuable component of compensation, yet it is governed by complex documents and provisions that may allow forfeiture, bad-leaver designations, or clawbacks.
Potomac Legal Group carefully analyzes vesting schedules and performance hurdles, distinctions between vested and unvested carry, and the treatment of your rights after departure. We also review how your status is classified under the relevant agreements and identify opportunities to preserve or negotiate continued participation in existing funds or specific deals. Our goal is to protect your entitlement to carry you have already earned and, where possible, secure fair treatment for partially vested or pending interests.
Co-investments and fund participation create additional layers of complexity. Many professionals have invested their own capital alongside the fund, and a departure can raise questions about whether those interests are retained, forcibly repurchased, or subject to particular valuation formulas. We examine the governing co-investment documents to clarify your rights, the firm’s repurchase or call rights, and any lockups or transfer restrictions, working to ensure that any required divestitures or transfers are conducted fairly and in line with the economic deal you believed you had.
Equity in the management company or parent entity presents its own challenges. Vesting cliffs, acceleration provisions, and repurchase rights can significantly affect what you keep when you leave. Disputes often arise around valuation methodologies or alleged “cause” terminations intended to strip you of value.
Potomac Legal Group helps you interpret complex equity plans, evaluate how repurchase rights and valuation mechanisms actually operate, and challenge aggressive or unfair practices. When appropriate, we negotiate improved exit terms, especially in situations where your departure is amicable or part of a broader restructuring or firm transition.
Bonuses and deferred compensation frequently become flashpoints at the point of separation. Discretionary and formula-based bonuses, guaranteed payments, and deferred compensation arrangements may all be at stake. We review plan documents and the employer’s historical practices to determine the strength of arguments for full or pro-rata bonus payments and to challenge efforts to deny compensation through strained interpretations of “cause” or performance criteria. Where appropriate, we negotiate structured payout schedules to smooth the tax impact and ensure timely payment.
Managing Non-Compete, Non-Solicitation & Confidentiality
Restrictive covenants often become the most significant barrier between you and your next role. Non-compete agreements are common in private equity, but their enforceability and scope are heavily dependent on state law and the specific circumstances of your employment and partnership. We evaluate the scope of restricted activities, geographic reach, duration, and the way the non-compete is tied to equity, partnership status, or severance. Based on that analysis, we advise you on the realistic risk of joining a competitor, starting your own fund, or shifting your focus to a related strategy. Where restrictions are overbroad, outdated, or inconsistent with current law, we work to narrow or challenge them, and where litigation risk is significant, we craft practical solutions.
Non-solicitation provisions raise equally important considerations. You may be contractually restricted from recruiting junior professionals, contacting LPs and other investors, or approaching co-sponsors, partners, and portfolio company management. We help you understand what conduct actually qualifies as solicitation, what falls outside that definition, and how to structure communications and networking so you remain compliant. When appropriate, we seek negotiated carve-outs or clarifications, such as exceptions for longstanding personal relationships, truly independent inbound inquiries, or specific sectors and geographies.
Confidentiality obligations and trade secret laws continue to apply long after your last day at a firm. Deal pipelines, proprietary sourcing strategies, modeling templates, valuation methodologies, LP lists, allocation strategies, portfolio company data, and business plans are all highly sensitive. We advise on what you can and cannot take with you, how to handle your personal work product, and how to transition to a new platform in a manner that does not expose you or your new employer to claims of misappropriation. Thoughtful planning in this area significantly reduces the risk of emergency injunctions or escalating disputes that could derail your move.
Strategic Approach to Exit Planning
To guide you through these issues, Potomac Legal Group provides end-to-end legal support for private equity transitions. We typically begin with a thorough review of your key documents, such as employment agreements, offer letters, partnership or LLC agreements, carry and co-invest arrangements, equity awards, bonus and deferred compensation plans, and any non-compete, non-solicitation, or confidentiality provisions, as well as relevant compliance policies. From this, we give you a clear assessment of your rights, obligations, and risks in various scenarios.
Once we understand your legal position, we work with you to design a strategic exit plan. This may involve carefully timing your departure to maximize financial benefits, coordinating with year-end distributions, vesting dates, or bonus cycles, and preparing the messaging and approach for conversations with management, HR, and colleagues. We help you decide when and how to disclose your new opportunity and plan for potential pushback, including negative reactions, attempts to reclassify your departure as “for cause,” or strategic counteroffers. Throughout this process, we aim to protect professional relationships while managing the legal side behind the scenes.
Negotiating your departure is often where our work becomes most visible. We regularly advocate for improved severance terms, continued benefits for an appropriate period, fair treatment of vested and unvested carry, partial buyouts or structured payouts of equity interests, and neutral or positive reference language. We also focus on refining or relaxing restrictive covenants to give you sufficient freedom in your next role. Our approach is business-focused: we seek practical resolutions that protect your economics and reputation while avoiding unnecessary litigation whenever possible.
Securing Your Next Role
The structure of your new position is equally important to how you manage the exit from your current role. We review and negotiate new employment agreements, partnership or membership documents, compensation packages, incentive plans, and restrictive covenants so that you understand exactly what you are signing and how it will affect your future mobility. The goal is to set you up not just for a successful immediate transition, but also for long-term career flexibility and security.
Potomac Legal Group represents a wide range of professionals across the private equity landscape, including equity partners and founding partners, managing directors and principals, senior and mid-level investment professionals, operating partners, and portfolio-level executives moving into or out of private equity roles. Whether you are leaving a global platform, a mid-market firm, or a specialized sector fund, we understand how your business operates and what is at stake for you.
When to Involve Legal Counsel
You do not need to wait for a problem to arise before calling a lawyer. In many cases, the best time to seek advice is when you are simply considering a move, exploring a soft offer, sensing changes in your current role or compensation, or anticipating a restructuring, merger, or spin-out. Early legal guidance can significantly improve your negotiating position and reduce the likelihood of conflict.
If you are a private equity partner, managing director, or investment professional contemplating a transition — or already navigating one — Potomac Legal Group is prepared to help. We offer consultations to review your situation, explain your options, and develop a practical roadmap tailored to your goals. Our focus is on protecting both your financial interests and your long-term career trajectory.