Private Equity Fund Terms: Emerging Trends and Recent Developments

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Thursday, June 10, 2021

Recorded event now available

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Course Materials

This CLE course will examine current trends and hot issues in private equity fund terms and best practices for structuring and negotiating fund document terms for private equity sponsors and limited partner (LP) investors. The panel discussion will include an analysis of how issues are addressed in the Institutional Limited Partners Association's (ILPA) Model Limited Partnership Agreement relative to market terms often seen in seasoned PE sponsors' fund documents.


Hot button topics in negotiating private equity fund terms include LPs increasingly pushing for "no-fault divorce" and more expansive "for cause" rights to terminate the general partner (GP) of the fund. LPs are also increasingly focusing on the standard of care for GP actions and the scope of the GP's fiduciary duties to the fund, as well as limitations on GP rights to indemnification from the fund, including carving out internal disputes and the standard for determination of bad faith, fraud, willful misconduct, or gross negligence.

LP investors continue to push for European-style "whole fund" waterfalls in which carried interest is calculated and paid at the fund-wide level. GPs can address this pressure from LP investors by sticking with deal-by-deal waterfalls but requiring recapture of realized losses and write-downs on prior investments before paying carried interest on current investments and adopting other measures such as interim clawbacks and escrow of carried interest payments.

In line with increased SEC scrutiny over how expenses are allocated, LP investors are increasingly focusing on provisions in fund documents regarding expense allocation practices among the management company, the fund, and any co-investment vehicles, separate accounts, and other investment vehicles managed by the management company, particularly concerning "broken deal" expenses. Management fee offsets of transaction fees and approval rights concerning affiliate transactions are also increasingly topics of interest for LP investors.

LP investors have shown an increasing desire to co-invest alongside the PE funds in which they invest, obtain a lower fee structure, and deploy capital in scale, and help build-out their organizations to ultimately make direct investments in portfolio companies without PE sponsor involvement. The terms of co-investment arrangements are typically negotiated on a case-by-case basis depending on factors such as the type and identity of the investor, asset type or portfolio company business, the intended use of the capital, and key tax considerations.

Listen as our authoritative panel of finance practitioners analyzes current trends in PE fund terms and best practices for sponsors and investors in structuring and negotiating agreement provisions.



  1. "No-fault divorce" and termination rights
  2. Indemnities
  3. General partner standard of care
  4. Carried interest and clawback mechanisms
  5. Conflicts and transaction fees
  6. Co-investments


The panel will review these and other key issues:

  • What are the LP investor hot button issues in "no-fault divorce" and "for cause" termination rights for removal of GPs and GP standard of care, fiduciary duties, and indemnification provisions?
  • What are the most recent trends concerning carried interest calculations and clawback mechanisms?
  • How are PE fund sponsors reacting to increasing SEC and LP investor scrutiny over expense allocation practices?
  • What are the current developments in co-investment terms, and how have those terms evolved?
  • How are these issues addressed in ILPA's Model Limited Partnership Agreement?


Mendez, Christopher
Christopher Mendez

General Counsel and Chief Compliance Officer
Commonwealth Asset Management

Mr. Mendez is the General Counsel and Chief Compliance Officer at Commonwealth Asset Management LP, a Los Angeles-based...  |  Read More

McDonald, John
John J. McDonald

General Counsel and Managing Director
Bankers’ Capital International

Mr. McDonald currently serves as General Counsel and FINRA-licensed Managing Director at Bankers’ Capital...  |  Read More

Saarinen, Michael
Michael D. Saarinen

Shearman & Sterling

Mr. Saarinen represents a wide range of private fund sponsors, from small, closely held startup asset management...  |  Read More

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