Free private markets document template
Fund Terms Review & Negotiation Memo Template
Create an LP fund terms review and negotiation memo covering economics, alignment, governance, key-person protections, conflicts and priority asks.
01
Executive summary
Fund Manager is raising Proposed Private Equity Fund VIII, a $6.0bn North American upper-middle-market buyout vehicle. This memo evaluates the proposed economics, alignment, governance and LP protections.
02
Economics
Management fee: 2.0% during investment period; 1.5% thereafter on invested cost. Carry and hurdle: 20% carry after an 8% preferred return with European waterfall. Fee offsets: 100% offset for transaction, monitoring, director and similar fees.
03
GP alignment
2.5% of aggregate commitments, funded substantially in cash
04
Fund term & extensions
10 years plus two one-year extensions, the second subject to LPAC consent
05
Key-person protections
Automatic investment-period suspension if two of four named key persons cease substantial involvement
06
Removal & termination rights
Cause removal by majority in interest; no-fault suspension by 75% and termination by 85%
07
LPAC, conflicts & valuations
LPAC reviews conflicts, valuations, cross-fund transactions, extensions and affiliate arrangements
08
MFN & side-letter treatment
Broad MFN subject to regulatory, tax, commitment-size and strategic-right exclusions
09
Recycling & fund-level facilities
Recycling: Up to 120% of commitments during the investment period, excluding recallable distributions. Subscription facility: Target 180 days; maximum 20% of commitments; report levered and unlevered returns.
10
Policy exceptions
Second extension control and recycling cap are outside preferred policy
11
Negotiation priorities
Require LPAC consent for both extensions, cap recycling at 110%, and strengthen key-person replacement rights
12
Recommendation
Proceed subject to resolution of priority asks and satisfactory final side-letter review