Coming to Terms with PE Fund Terms

A wide variety of institutions, foundations, and high-net-worth individuals invest in private equity funds; the largest of these institutional investors have both the resources to engage attorneys and consultants to carry out thorough private equity fund reviews, as well as the leverage necessary to negotiate and effectuate recommended changes to a fund’s terms.

Each prospective investor has certain investment requirements that are non-negotiable, whether relating to fees and expenses, fund transparency and reporting, portfolio construction and/or governance, or other matters. As investor's counsel, it is critical that you speak with your client and/or its consultants prior to conducting a fund review to understand the client's priorities so that you can identify any mandatory points and prioritize negotiations accordingly.

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Related Content

• Fee and Expense Disclosures in Private Equity
  Read this practice note addressing the ongoing scrutiny by the Securities and Exchange Commission on the fee and expense allocation practices of private equity fund managers.

• Investor Remedies
  Review these remedy provisions, which tend to be highly-negotiated terms, in a limited partnership agreement. Remedies can include key person provisions, termination and removal rights, informational rights, and other terms.

• Term Sheet for a Private Equity Fund (ILPA Model Form)
  Review this sample term sheet from the Institutional Limited Partners Association for an overview of typical fund terms and investor-friendly adaptations.

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