News

Law

Asset Management

Investment Banking

Wealth

Hedge Funds

People

Newsletters

Events

Lists

Private Equity

Investors warn of diluted protection clauses amid growth of PE funds

Limited partners in private-equity funds typically demand strong provisions in commitment agreements to ensure key fund professionals devote substantial or all of their time to the investment vehicles. Yet protections in such provisions often fall short.

Key person clauses identify who limited partners consider critical for a fund’s investments or operations. If the clauses are triggered, investment periods can be suspended and investors can choose to liquidate funds or not reactivate them.

WSJ Logo