Your Fund Just Had an Exit. Here's What Happens to Your Money.

The deal closed.

The press release went out. The firm-wide email hit. Everyone's congratulating each other in the hallway. LinkedIn is buzzing with "excited to announce" posts from the deal team.

Meanwhile, you're quietly googling "how long until I get my carry distribution."

Let's talk about what actually happens between a fund exit and money in your account.

The timeline (longer than you think)

Day 0: The deal closes

The portfolio company is sold. Purchase price is wired. The fund now holds cash instead of equity.

You might feel like you should be getting a check soon. You will not be getting a check soon.

Days 1-14: Post-close accounting

The fund administrator reconciles everything. Transaction costs are calculated. Working capital adjustments are finalized. Any escrow or holdback amounts are set aside.

This is boring but important. The "headline" sale price and the "net proceeds to the fund" are different numbers.

Days 15-45: Waterfall calculations

This is where the fund figures out who gets what. The distribution waterfall in your fund's LPA determines the order:

The fund administrator runs these calculations. Your fund's CFO reviews them. The GP committee approves the distribution.

Days 30-60: LP notice and distribution prep

LPs get notified of the upcoming distribution. Capital call/distribution accounts are verified. Wire instructions are confirmed.

Days 45-90: Money moves

The fund makes the distribution to LPs. Carry is distributed to the GP entity. The GP entity distributes to individual carry holders (you).

So from deal close to cash in your personal account: 45-90 days is typical. Sometimes faster, sometimes slower.

Why it takes so long

Every step in that timeline involves multiple parties, verification, approvals, and paperwork.

The fund administrator doesn't just calculate the waterfall once — they run it, have it reviewed, adjust for any issues, run it again. LPs get notice periods. Banks process wires on their own schedule.

And everyone is appropriately careful. A distribution error is embarrassing and expensive to fix. Taking an extra two weeks to get it right is better than clawing back an incorrect distribution.

The escrow and holdback question

When a company is sold, some portion of the proceeds usually sits in escrow. This covers:

Typical escrow: 5-15% of purchase price, held for 12-24 months.

What this means for you: Your first distribution from a deal won't be 100% of your carry. Some of it is held back pending escrow release. You might get 85% now and 15% in 18 months. Or 80% now and the rest in multiple tranches.

Tax withholding surprises

Here's something that catches people: tax withholding on carry distributions.

Many funds withhold taxes before distributing carry. The withholding rate is often a rough estimate — maybe 40% federal and state combined. But your actual tax situation might be different.

Possible outcomes:

Check your fund's withholding policy. Look at your actual marginal rate. If there's a big mismatch, adjust your quarterly estimates accordingly.

The "what do I do now" framework

Let's say the distribution hit your account. You've got $800K sitting there (after taxes and withholding). What now?

Step 1: Do nothing for 30 days.

Seriously. Don't make any big decisions. Let the reality sink in. Talk to your spouse. Get advice. But don't move the money anywhere or commit to anything immediately.

This is the single most important piece of advice I can give. The urgency you feel is not real. The money will still be there in 30 days.

Step 2: Park it somewhere safe.

While you're deciding, put it somewhere it earns yield without risk: money market fund, Treasury bills, high-yield savings. You're earning 4-5% while you think.

Step 3: Make a list of what this money is for.

Is it:

Different purposes require different decisions. Get clear on the purpose before moving money around.

Step 4: Coordinate with your overall plan.

A distribution isn't isolated. It affects your:

Talk to your advisors. Ideally, you've had this conversation before the distribution arrives, not after.

Step 5: Execute thoughtfully, not all at once.

If you're investing the money, you don't have to do it all in one day. Dollar-cost average into positions. Make decisions deliberately. There's no prize for speed.

The wealth manager feeding frenzy

Let me warn you about something: the moment you have a liquidity event, wealth managers will appear.

They will find you. I don't know how, but they will. LinkedIn messages. Emails. "Referrals" from people you haven't talked to in years.

This isn't necessarily bad — you might need a wealth manager. But:

A good wealth manager understands carry, K-1s, co-investment, GP commits, and concentrated illiquid positions. Many don't. If you have to explain Section 1061 to them, move on.

The next distribution question

One distribution leads to the next question: when's more coming?

The honest answer is often "I don't know." Even your fund's partners may not know exactly when the next exit happens or how big it will be.

What you can do:

But fundamentally, you're back to the uncertainty we talked about in Post 2. The first distribution is proof the carry is real. It's not a guarantee of what comes next.

The bottom line

Exits are exciting. Distributions are exciting. But the process from deal close to cash in your account is slower and more complex than most people expect.

Your job is to:

The deal closed. The money is coming. You can afford to be patient and strategic.

Next week: Should you roll or sell? The GP-led secondary decision.

Talk soon.

— Carried Away