US law firm Seward & Kissel has just published its Seed Transaction Deal Points study. The study shows that, in seed deals between 2014 and 2018, the alignment between seeders and managers has improved. Here are some of its main points: 1. Managers are increasingly looking to seeders to provide working capital support for , direct capital investments , working capital loan facilities , prepaid management fees, or , a deferral of the seeder's revenue share.

2. A revenue share structured as a special limited partnership interest in the master fund remains the dominant type of a seeder's interest in a management company.

3. To ensure a seeder's capital is "sticky", managers require the seed investment to be "locked-up" for some time, and a two-year lock up period has become the most common.

4. Seeders require the ability to withdraw their capital in the event that the fund or manager experiences a variety of specific harmful events affecting the integrity of the seed investment or the manager's future as a business. Key man events remain the most common of these liquidity rights.

5. Seeding deals usually include non-competition and non-solicitation provisions to ensure that a key person's post-withdrawal activities do not affect the fund. Seeders also commonly request "tail rights" which allow them to receive their seed economics in any business started or managed by the key person within a defined period after they leave the business.

6. Manager buyouts, once typical in roughly two thirds of seed transactions, now appear in less than half of the observations.

7. When pricing a buyout, seeders have recently sought to include an additional test based upon AuM, where the seeder would receive the greater of the price implied by the two methodologies.

8. While still somewhat uncommon (holding steady at 20%-30% of the annual observations), a number of se......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.