Partnership structure — roles?
GPs manage; LPs contribute capital, limited liability.
LPs — role?
Provide capital; passive investors.
Typical investment split?
GPs 1%, LPs 99%.
GPs — role?
Manage operations; liable for losses.
Disbursement schedule?
10-30% at closing; rest over 3-5 years.
Profit split — typical?
80% LPs, 20% GPs (carry).
Disbursement schedule — timing?
10-30% at closing; rest over 3-5 years.
Partnership agreement — governs?
Profit sharing, restrictions, vesting.
Fund size constraints — purpose?
Avoid adverse selection; prevent GP overload.
Carried interest — role?
Incentivizes GPs after LPs recover capital.
Test your knowledge with 9 questions on Understanding Private Equity Fund Partnerships.
1. What is the primary role of General Partners (GPs) in private equity funds?
2. What is the typical split of investment between General Partners (GPs) and Limited Partners (LPs) in a private equity fund?
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