Excited to share this thought piece we wrote on performance based vesting in search funds. The Matlack formula is used in the search fund space to calculate how much performance-based stock vests in case of hold periods longer than 5 years. It is useful in specific situations where one single investment is made by investors and one single distribution is received by investors at exit. In practice, however, investors and searchers increasingly deal with partial sales, distributions, recaps, additional capital investments, etc. The Matlack formula, which is based on MOICs, then becomes less useful. Without giving up on the economic standard set by the Matlack formula for vesting, we suggest an IRR based methodology that can be applied in all situations. This methodology can serve as guidance for investors, boards and searchers on how to address the vesting of performance-based stock. redacted