Despite being a fundamental component in an LP/GP relationship, there aren’t really hard and fast rules for structuring limited partnership agreements (outside of the ILPA’s guidelines). There are, however, a lot of variables to consider—all of which could be assigned different levels of significance based on your goals.
Obviously, the details matter, but more importantly, the LPA is a key component in what will be a 10+ year relationship. In this section, we discuss some ways to align incentives between your firm and a fund manager, as well as strengths and weaknesses of different fee types and carry structures.
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