This page explains what your SPV flowcharts should mean—who pays what, when, to whom, and under which legal documents. Use it as the narrative layer around your visuals.
What an SPV is
An SPV (Special Purpose Vehicle) is a dedicated legal entity created to hold a single asset (or single transaction) and ring‑fence liabilities, governance, and cashflows at the deal level. In a club deal, the SPV is the “container” that receives investor capital, acquires the asset, pays fees/expenses, receives distributions, and then returns proceeds to investors at exit.
Parties and documents
A clean SPV flowchart usually shows the key actors and which document governs each relationship. The essential roles mirror standard private markets language: the Sponsor/Manager (often GP/manager) runs the vehicle, while investors participate as LPs or shareholders depending on the jurisdiction and entity type.
| Typical documents to reference next to your diagrams: |
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Typical documents to reference next to your diagrams:
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Money flows (the 3 phases)
Think of SPV flows in 3 distinct phases: 1) closing 2)operating period, and 3) exit—each with its own “who pays whom” logic. Your diagrams should make it obvious which flows are one‑off (closing) versus recurring (operations) versus terminal (exit).
1) Closing (T‑30 to T‑0)
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Investors fund the SPV: either via a capital call/drawdown (if commitments exist) or a one‑time subscription (if fully funded upfront).
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Lender funds the SPV (if leveraged): debt proceeds arrive, usually into a controlled account.
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SPV pays: purchase price (to seller), transaction costs (legal, due diligence, taxes), and any deal fees that are due at closing.
2) Operating period (month‑to‑month / quarter‑to‑quarter)
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Asset generates cash (rent, interest, operating income, distributions from OpCo).
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Cash is applied in an agreed order: operating expenses → debt service → reserves → management/monitoring fees (if any) → investor distributions.
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Reporting flows alongside cash: monthly KPI packs, quarterly financials, covenant compliance, and board updates (if applicable).
3) Exit (sale / refinance / recap)
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Buyer or refinancing bank wires funds to the SPV (often via escrow).
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SPV repays debt and closing costs first (senior claims).
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Remaining equity proceeds are distributed per the waterfall (return of capital → preferred return/hurdle → catch‑up → promote split, if relevant).
Legal flows (control, rights, and friction points)
In club deals, the legal flow is the hidden engine: it determines who can approve leverage, replace the manager, block a sale, or access information. A strong legal flowchart is less about money and more about decision rights—what decisions require manager discretion vs investor consent vs lender consent.
