A Limited Partnership Agreement (LPA) is the legal document that governs the relationship between the general partner and limited partners in a private equity or venture capital fund. The LPA establishes the fund's structure, investment strategy, fee arrangements, governance provisions and the rights and obligations of all parties.
The LPA also defines key terms such as the investment period, fund life and the circumstances under which the general partner can make investment decisions without limited partner approval. For institutional investors, LPA terms are heavily negotiated and often supplemented by side letters.
LPA in fund operations
The LPA serves as the operational rulebook for fund administration. Every capital call, distribution, fee calculation and reporting requirement must comply with LPA terms. This systematic approach reduces errors and ensures every transaction aligns with governing agreements. For emerging fund managers, understanding LPA provisions is essential during fund launch, as these terms govern the fund's operations throughout its entire lifecycle.
