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Side Letter and Obligation Tracker
Send the partnership agreement and every side letter, and get each obligation by partner, clause and deadline after the MFN elections have run.
Braeriach Capital Partners III signed ten bespoke provisions across fifteen side letters. Run the most favored nation elections in Section 12.6 of its partnership agreement to closure and those ten become 50 live obligations, each owed to a named partner on a named clock. The fee and carry concessions go from 2,720,000.00 dollars to 9,135,000.00. Nothing was renegotiated to get there. Every one of those elections was available on the day the fund held its final closing, and the register the general partner keeps shows ten rows.
The platforms built for this hold a row per provision with the partner, the clause and a date, and the better ones generate MFN election forms from commitment thresholds. Both are one pass. An election is not a filing: it places the provision into the electing partner's own side letter, which lowers the commitment ceiling every other partner measures against. The second pass is where half the money is, and it only happens if somebody reruns the ladder.
Written for the fund CFO, the general counsel and the administrator producing the quarterly package against deadlines that now differ per partner. The data behind an emissions report owed to 92 percent of commitments has to come out of portfolio company reporting, on a clock nobody set when the side letter was signed. The discipline is the one an exit waterfall needs: read the mechanics out of the document instead of assuming the standard version, because the standard version is what the register already says.
An uncapped MFN in one side letter reprices every other MFN in the fund
Section 12.6 lets partners at or above 36,000,000 dollars elect any eligible provision granted to a partner at or below their own commitment. Partners at or above 12,000,000 get the same right for reporting, information and notice terms only. Kilchurn Strategic Partners committed 28,000,000 and negotiated an MFN with no size cap. When Kilchurn elects the fee reduction first granted at 64,000,000.00, the lowest commitment holding it becomes 28,000,000, and three larger partners become eligible who were not before.
The elections close after two rounds. The first produces 32 of them and moves the concession from 2,720,000.00 dollars to 4,635,000.00. The second produces 8, every one traceable to Kilchurn, and adds 4,500,000.00 more. At closure the 22.5 basis point fee break sits on 252,000,000.00 of commitments rather than 64,000,000.00, and the 2.5 point carry reduction on 252,000,000.00 rather than 80,000,000.00. Against gross general partner economics of 120,000,000.00 at a two times fund, that is 7.61 percent given away instead of 2.27.
Reporting cascades the same way. A quarterly emissions report granted to a 12,000,000 dollar partner finishes owed to 11 partners holding 92 percent of commitments, on a 45 day clock fifteen days ahead of the agreement's own quarterly report. ILPA warns that the cost of complying with side letters can be sizeable. Five partners finish holding both a right to unredacted copies of every side letter and a right that their own terms stay undisclosed. Neither grantee held both as signed.
How it works
Send the documents
The partnership agreement and every side letter, including the ones signed at later closings.
Read the MFN ladder
Thresholds, eligible categories, express carve-outs, and any partner whose MFN has no size cap.
Run the elections
Each round lowers the ceiling for the next, so the set is iterated until it stops growing.
Price and date it
What the cascade costs, when each obligation is next due, and where two of them collide.
What you get
- Every obligation as its own row: the partner owed, the clause, the trigger and the date
- The MFN elections run to closure, so the register shows what is owed rather than what was signed
- What each concession costs once it has cascaded, in fee dollars and in carry points
- Provisions expressly carved out of the MFN, held apart from the ones anybody can reach
- Direct conflicts named, with the partners who finish holding both sides of the contradiction
- One deadline calendar across the agreement and every side letter, ordered by what is next due
- The round each obligation entered on, so the next closing is rerun rather than read again
Common questions
Is an MFN election not something the partner has to actually make?
It is, and the register keeps the two apart. What has been elected is the liability. What is available to elect is the exposure. Braeriach had given away 2,720,000.00 dollars on the documents as signed and was exposed to 9,135,000.00 if every eligible partner elected. Both numbers matter, and only the first is usually known.
Why does one uncapped MFN matter so much?
Because a size-capped MFN measures against the smallest commitment already holding a provision, which is not a fixed threshold. Kilchurn's 28,000,000 dollar election pulls that floor down and lets three larger partners in behind it. 4,500,000.00 dollars of the total, close to half, exists for that reason alone.
Does an elected provision become electable by everyone else?
That is a drafting question and the clause usually answers it, one way or the other. Where the clause is silent, the run reports both closures and the money between them rather than picking one. It is the single assumption that most changes the answer, so it is stated on the face of the register instead of buried.
What happens to provisions carved out of the MFN?
They stay as rows, marked as not electable, with the carve-out language quoted next to them. Two in the worked example: a statutory excuse right from fossil fuel extraction, and co-investment priority above a deal size, the right behind a dedicated SPV rather than the fund itself. Excuse rights are worth watching, because they change the set of partners a capital call is allocated across.
Do the elections have to be rerun after every closing?
Yes, and that is why the ladder is held rather than a list. A side letter signed at a later closing is reachable by partners who closed a year earlier, and one new uncapped MFN reprices the set. It also moves due dates, which is what an investor tracking inbound notices reconciles from the other end. Rerunning the ladder is cheap. Reconciling fifty rows by hand is not.
How does it handle a direct contradiction?
By naming the partners on both sides of it. Five partners in the worked example finish holding both a right to unredacted copies of every side letter and a right that their own terms stay undisclosed. Neither grantee held both as signed, so the conflict was created by the elections rather than by the drafting.
Why does it matter whether the other investors know?
Because examiners ask. SEC staff have reported advisers that granted preferential liquidity terms in side letters without adequate disclosure, leaving other investors unaware of the harm those terms could cause. An answer to that question is built from a register that shows what is owed and to whom, election by election.
Side Letter and Obligation Tracker
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