Limited Partnership Agreement (LPA)
The LPA is the governing contract defining fund economics, rights, obligations, and oversight mechanisms.
Definition
The LPA is the legal backbone of a private fund. It defines fee and carry economics, waterfall mechanics, investment restrictions, term and extensions, key person clauses, LPAC structure, transfer rules, conflict handling, reporting obligations, and remedies. When conditions change—team events, valuation disputes, extensions—the LPA determines what LPs can enforce. Allocator Context Institutional allocators underwrite the LPA directly. “Market terms” claims are irrelevant if the document language is unclear or inconsistent. LPs look for practical protections: enforceable clawbacks, conflict governance, valuation process, reporting, and fair treatment across investors. Decision Authority LPA review is typically handled by counsel and governance teams, and material deviations can influence IC outcomes. The more complex or nonstandard the LPA, the more time and internal coordination is required. Why It Matters for Fundraising Fast closes require a clean LPA that matches the pitch. If commercial claims (fees, carry, governance) don’t match the LPA language, LP trust breaks and timelines stretch. Key Takeaways The enforceable truth source for terms and governance Consistency and clarity reduce diligence friction Nonstandard language increases approval time Controls what happens in stress and disputes