Analysis of the ILPA Model Fund Agreement

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.