Law360, New York (May 16, 2016, 5:36 PM EDT) -- Probably the most common form of vesting criteria for performance-based incentive equity in private equity transactions is based on the sponsor's achievement of a multiple of invested capital and/or internal rate of return. Typically, the sponsor seeks a multiple taking into account both cash proceeds received from the portfolio company, such as through receipt of cash dividends, and cash proceeds from the disposition of its equity securities. If, prior to a change of control, the sponsor receives noncash proceeds, such proceeds usually are not taken into account until they are reduced to cash. Although these mechanics generally are straightforward, complications arise when addressing the consequences of a change of control or an initial public offering. The following addresses some of the issues that arise in connection with determining whether performance-based vesting criteria have been achieved in the context of a change of control....