On October 30, 2019, the Institutional Limited Partners Association (“ILPA”) publicly released a model Limited Partnership Agreement for private equity buyout funds. The Model LPA is intended to represent the ILPA Principles 3.0, which offer a series of benchmark provisions intended by ILPA to promote a closer alignment of interests among sponsors and investors. In light of ILPA’s stature and the influence of earlier versions of the Principles on the private fund industry, we expect that some of the Model LPA terms will be raised in the course of negotiations, particularly those involving first-time fund sponsors. As highlighted in this Legal Update, the Model LPA generally reflects negotiated positions that are more favorable to investors than to sponsors. Our analysis is intended to help facilitate review of ILPA’s proposed benchmarks for all parties as we move into a more competitive fundraising environment.

 

On October 30, 2019, the Institutional Limited Partners Association (“ILPA”) publicly released a model Limited Partnership Agreement for private equity buyout funds.1 ILPA is the world’s largest industry association for institutional LPs in the private equity asset class, and its prior announcements of proposed principles have historically affected sponsor-investor negotiations. The Model LPA is intended to represent the ILPA Principles 3.0,2 which offer a series of benchmark provisions intended by ILPA to promote a closer alignment of interests among sponsors and investors. ILPA describes the purpose of the Model LPA as follows: The hundreds of LPAs developed each year are the product of bespoke efforts and one-off negotiations that come with excessive cost to both GPs and LPs. We encourage all industry stakeholders to review the [Model LPA] and use it as a basis for a more effective process, with the confidence that the provisions therein are supported by the LP community.3 In light of ILPA’s stature...