Profits Interest vs. Capital Interest

searcher profile

November 30, 2025

by a searcher from Western Washington University - College of Business and Economics in Seattle, WA, USA

I'm looking to put together an earn-in deal structure to acquire a target company in exchange for value creation/consulting services. Trying to decide on profits interest vs. capital interest on the equity awards over time and potential tax implications. Some specifics include an initial equity grant upon signing of a PSA, subsequent annual equity grants over the next 3 years based on achieving performance targets, and a buyout of the remaining equity after 3 years based on a pre-determined sale price/valuation. Has anyone dealt with this type of a deal structure before and offer up any guidance or refer an experienced attorney/CPA who can help with the deal?
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Reply by a professional
from University of Massachusetts Amherst in Hartford, CT, USA & Chicago, IL, USA
I have dealt with profits vs. capital interest from many angles before. Feel free to DM to discuss.
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