Limited Partnership Agreement (LPA)

What an LPA covers

Related documents

The private placement memorandum describes the offering and its risks but is not the governing contract. The subscription agreement records each investor's commitment, eligibility representations and tax and anti-money-laundering information. Side letters vary terms for individual LPs. A management or advisory agreement between the fund and the manager, the GP's own operating agreement and the carry vehicle's documents sit behind the LPA, and parallel funds and alternative investment vehicles have their own LPAs on matching terms.

Governing law and vehicle

Common choices are a Delaware limited partnership, a Cayman Islands exempted limited partnership, a Luxembourg special limited partnership (SCSp), and English, Guernsey, Jersey or Irish limited partnerships. Each law sets its own baseline for partner liability, information rights and how far duties can be modified. For example, under Luxembourg law an SCSp is formed between one or more general partners with unlimited joint and several liability for its obligations and one or more limited partners who commit only a specified contribution, and it has no legal personality separate from its partners (Article 320-1 of the Law of 10 August 1915).

Delaware's limited partnership statute states a policy of giving maximum effect to freedom of contract and to the enforceability of partnership agreements; the agreement may expand, restrict or eliminate partners' duties but may not eliminate the implied contractual covenant of good faith and fair dealing (6 Del. C. section 17-1101(c)-(d)).

Model terms and benchmarks

The Institutional Limited Partners Association (ILPA) publishes a Model LPA for a traditional buyout fund in two Delaware-law versions: a whole-of-fund waterfall version (first released October 2019, updated July 2020) and a deal-by-deal version (July 2020). LPs also benchmark drafts against the ILPA Principles 3.0 (June 2019), which set out LP positions on economics, governance and transparency. Neither is binding; both are used as reference points in negotiation.

Negotiation and amendment

The GP's counsel drafts the LPA; anchor and large LPs negotiate it, often through a joint comment process, before the first closing. Later LPs usually accept the agreed text and negotiate side letters. After closing, amendments generally need the consent of a stated majority or supermajority in interest of LPs, and changes that adversely and disproportionately affect particular LPs or increase their obligations usually need those LPs' consent. The thresholds are negotiated and vary. For a Delaware limited partnership, an agreement that provides how it may be amended may be amended only in that manner or as otherwise permitted by law (6 Del. C. section 17-302(f)).

Not the same as

• Private Placement Memorandum (PPM): A private placement memorandum (PPM) is a disclosure document; the LPA is the binding contract that governs the fund.
• Side Letter: A side letter varies terms for one LP; the LPA applies to all.
• Subscription Agreement (Subscription Documents): The subscription agreement admits an investor and records its commitment and representations; the LPA governs the partnership.

Common mistakes

• Relying on the PPM summary of terms instead of the LPA text, which prevails.
• Reviewing the LPA without the side letters, and the terms other LPs elect under most favored nation clauses, that change how it applies.
• Treating the ILPA Model LPA as market standard; it is a benchmark that many LPAs depart from.

Questions

External standards

Sources

1. ILPA Model Limited Partnership Agreement (Whole of Fund and Deal-by-Deal versions). Institutional Limited Partners Association, ILPA, Whole of Fund first released October 2019, updated July 2020; Deal-by-Deal version and term sheet released 22 July 2020. Status: Current (checked 2026-10-01). Release history; Delaware-law buyout fund models — supports: Two model LPA versions and their dates
2. ILPA Principles 3.0: Fostering Transparency, Governance and Alignment of Interests for General and Limited Partners. Institutional Limited Partners Association, ILPA, Third edition, released 27 June 2019. Status: Current edition (no 4.0 found as of 2026-10-01) (checked 2026-10-01). Third edition, released 2019-06-27 — supports: ILPA Principles 3.0 as an LP benchmark built on alignment of interest, governance and transparency
3. Loi modifiée du 10 août 1915 concernant les sociétés commerciales - Art. 320-1 (société en commandite spéciale, SCSp). Grand Duchy of Luxembourg, Legilux (consolidated version applicable 2 March 2025), SCSp introduced by Law of 12 July 2013; now Art. 320-1 (last amended by Law of 7 August 2023). Status: In force (checked 2026-10-01). Art. 320-1(1)-(2) — supports: SCSp: general partners with unlimited joint and several liability; limited partners who commit only a specified contribution ('qui n'engagent qu'une mise déterminée'); no legal personality distinct from its partners
4. 6 Del. C. s.17-1101 - Construction and application of chapter and partnership agreement (DRULPA). State of Delaware (Delaware Code Online), Delaware Code Online, Title 6 ch. 17 (accessed 2026-10-01). Status: in force (checked 2026-10-01). Sec. 17-1101(c)-(d) — supports: Delaware policy of maximum effect to freedom of contract; duties may be expanded, restricted or eliminated by the partnership agreement, but not the implied contractual covenant of good faith and fair dealing
5. 6 Del. C. s.17-302 - Classes and voting (Delaware Revised Uniform Limited Partnership Act), incl. s.17-302(f) amendment of the partnership agreement. State of Delaware (Delaware Code Online), Delaware Code Online, Title 6 ch. 17 (accessed 2026-10-02). Status: in force (checked 2026-10-02). Sec. 17-302(f) — supports: A Delaware partnership agreement that provides how it may be amended may be amended only in that manner or as otherwise permitted by law

• Private Placement Memorandum (PPM)
• Subscription Agreement (Subscription Documents)
• Limited Partnership (LP)
• Limited Partner Advisory Committee (LPAC)
• Key Person Clause
• Side Letter
• Distribution Waterfall

• Capital Commitment
• Carried Interest (Carry)
• GP Clawback
• Due Diligence Questionnaire (DDQ)
• Due Diligence
• Employee Retirement Income Security Act of 1974 (ERISA)
• European (Whole-Fund) Waterfall
• First Close
• Fundraising (Private Fund Fundraising)
• General Partner (GP)
• GP Commitment
• Independent Sponsor
• Investment Period
• LP-Led Secondary
• Most Favored Nation (MFN) Clause
• Net Asset Value (NAV)
• No-Fault Divorce
• Preferred Return (Pref)
• Term Sheet
• Two and Twenty