True Ups in Private equity

I see the term ‘true up’ on P111 of V5. What is it?

I don’t know the formal definition, but let’s say a GP of a $100 million (fully capitalized) fund earns carried interest of 5%, so he’s entitled to $5 million. The money is kept in an account and the next year the fund loses 3%, or $3 million. The GP would then have to take $3 million out of his $5 million to pay back the LPs for their losses. Disclaimer: I think this is the way this works from examples that I’ve worked through.

I’m not positive, but the description by bpdulog sounds like a clawback. This is the definition of a clawback: clawback (the provision for when the GP must return profits) I don’t know what a true up is

according to notes. true up is a way for claw back which should be settled annually it is compared to the way that claw back is settled in total return the fund earned