Buzz Archive:
Private Equity Limited Partnership Agreements: Common Trigger Events and Limited Partner Remedies

by Cameron Koziskie and Sam Ault, Torys LLP, 1/24/2008

The limited partnership agreement (LPA) for a private equity fund represents a road map for the fund. It embodies the fundamental interests and expectations of the parties. One of its objectives is to ensure that the incentives of all parties are well-aligned. Aside from the financial terms of the fund, the remedies (and associated triggers) available to the limited partners are the most intensely negotiated aspects of the LPA during the process of fund formation. Defining the remedies and triggers is vital to aligning the incentives of general partners (GPs), limited partners (LPs) and affiliates, and ensuring that extraordinary situations can be dealt with swiftly and successfully.

The purpose of this article is to discuss some of the issues surrounding common remedies and triggers. The remedies discussed include the suspension or termination of the commitment period; the removal and replacement of the GP; and the termination of the fund. The triggers discussed by our guest authors this week, Cameron Koziskie and Sam Ault of Torys LLP, include key-person, no-fault and for-cause provisions.