How should a fund be structured to avoid risk when it comes to many investors exiting at the same time?
Assuming we are referencing a partnership (or LLC), the exit plan should be considered when they are drafting the operating agreement. It is important to understand how they plan to allow the investors to exit, whether someone will step in to buy the interest, whether the fund will redeem the investors, or if the intention would be to sell the underlying property/business to a third party.
What risk are you thinking of? There is nothing in the Opportunity Zone rules that requires a fund to assure that its investors can "exit." If they find buyers, great; if not, then they will have to wait till they can find someone, or until the fund or any subsidiary entity in which it invests sells. Their assets and liquidates.
Are the investors redeeming? Funds usually don't allow investors a redemption right. If the investors are selling to third parties, the only risk to the fund is vetting the new investor and forcing the adoption of the governing documents. If you're concerned about redemptions, the simple solution is to not allow redemptions. It's typical for private syndications to forbid redemptions; the investor is along for the ride until a capital event.
Sell the assets and liquidate after 10 years, so the capital gain becomes tax-free.
The investors are at the mercy of when the fund sells investments and liquidates, or when they find another person who would like to buy their fund interest from them. If the investors want to exit collectively, the property will need to sell or potentially be refinanced to allow some investors to depart now.
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