Preferred Equity Disclosures and the Guarantee Trap
from Syndication Attorney Field Notes with Tilden Moschetti Hosted by Tilden Moschetti
Preferred equity in a Regulation D syndication is about priority, not certainty. In this episode, syndication attorney Tilden Moschetti addresses a common structural assumption: marketing preferred returns as 'guaranteed' yields. Using a straightforward whiteboard hypothetical, Tilden breaks down how the waterfall works when an 8% Class A share scenario underperforms. You'll learn why standing at the front of the distribution line only matters if the venture generates cash, how to separate preferred returns from returns of capital in your Operating Agreement, and why your Private Placement Memorandum must accurately reflect structural risk. A practical look at structuring for priority while keeping your marketing language aligned with legal reality. Also see: Preferred Equity Investments in Reg D Syndications — https://www.moschettilaw.com/preferred-equity-reg-d/ Note: This episode's audio is generated using AI voice cloning technology based on Tilden Moschetti's written work. Watch the video on YouTube: https://youtu.be/hdDpQ3o9Ir8
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What this episode covers
Preferred equity is a powerful tool in a Regulation D syndication, but labeling it as a guaranteed return is a common trap. Tilden breaks down the legal and practical differences between priority and certainty.
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