The quick version: Some of the biggest names in private equity — Apollo, Carlyle, KKR — paid their founders hundreds of millions of dollars using a niche tax arrangement called a "tax-receivable agreement." Now shareholders are suing, saying the payouts were basically free money for the bosses. Courts in Delaware are letting the cases move forward.

First, what's a "tax-receivable agreement" (TRA)?

Stay with me — the idea is simpler than the name. When some companies go public, they get set up in a special hybrid structure (nicknamed an "Up-C"). Later, when the founders swap their private ownership stakes for public shares, that swap can create a big tax deduction for the company — think of it as a coupon that lowers the company's tax bill for years.

A TRA is a side deal that says: when the company cashes in that tax coupon, it will hand most of the savings (usually about 85%) back to the founders and early investors. So the regular public shareholders get the leftovers, and the insiders get the bulk of the tax perk. Legal, common, and mostly invisible to outsiders.

What actually happened

The spotlight landed on Apollo Global Management. After co-founder Leon Black left in 2021 (following revelations he'd paid Jeffrey Epstein over $150 million for "tax advice"), Apollo cleaned up its governance and collapsed a structure that had given founders near-total control. As part of that, the board agreed to pay founders and top execs about $570 million to buy out their TRA rights. Co-founders Marc Rowan and Josh Harris could each pocket north of $100 million. (Financial Times, InvestmentNews)

Shareholders sued, and the core argument is blunt: there was no real economic reason to pay off those TRAs. They claim the conversion wasn't clearly a taxable event that created the tax benefit in the first place — so the founders got paid for a coupon that may not have existed. (Bloomberg Law)

It's not just Apollo

This is turning into a wave. Delaware's Chancery Court has let similar cases proceed against Carlyle (a $344 million founder payout) and is hearing one against KKR, where a pension fund says co-founders engineered roughly a $500 million TRA payout. Even GoDaddy — yes, the website company — is being sued for buying out TRA rights for $850 million when its own books valued that liability at just $175 million. (Bloomberg Law – Carlyle, Transacted – KKR, Bloomberg Law – GoDaddy)

Where things stand right now

None of these payouts have been unwound yet. Apollo has asked the court to toss its case — that request is fully briefed and now sits with the Delaware judge, with no settlement locked in despite earlier speculation one was near. Carlyle's founders made the same move in January 2026 and are also waiting on a ruling. Bottom line: the cases are slowly grinding forward, not fading away. (Apollo 10-Q, FY2026, Cleary Gottlieb – 2026 litigation outlook)

Why you should care

TRAs are a legal way for insiders to skim the tax benefits that would otherwise help every shareholder. There are around 150 of these deals outstanding, worth roughly $27 billion combined. If Delaware courts keep siding with shareholders, it could reshape how founders get paid across finance and tech — and make boards think twice before signing off on nine-figure buyouts.

What to watch next

Rulings on the Apollo and Carlyle motions to dismiss, whether Apollo actually settles, and whether the KKR and GoDaddy cases reach trial. A single big shareholder win could turn this trickle of lawsuits into a flood.

Sources — go double-check us

Not tax advice — just a plain-English heads-up. Talk to a real tax pro before making money moves.