Private Equity Compliance

CHAPTER 3Limited Partner Advisory Committees and Other Boards

3.1 INTRODUCTION TO LIMITED PARTNER ADVISORY COMMITTEES

As a reminder of the terminology we introduced in Chapter 1, a private equity fund is typically established under a legal structure known as a limited partnership and the investors in the fund are commonly referred to as limited partners (LPs), which can also be referred to simply as a private equity fund's investors. As with most investments, at its most basic level LPs in a fund provide money to a private equity fund, and by association the funds, with the hope of capital appreciation.

Throughout the course of their investing relationship LPs and general partners (GPs) interact in a number of ways. For example, the GP may send information regarding the performance of a particular LP account to the LP on a quarterly basis. On a practical basis this information may come directly from an LP herself or a third party known as an administrator. An administrator is a third-party firm that is responsible for performing a number of services for a fund, including fund accounting, calculating the net-asset-value (NAV) of a fund, and assisting in the oversight of shareholder services–related activities. Additionally, the LP may engage with the GP regarding questions she may have relating to the performance of a fund in which she is invested or relating to ongoing fund operational due diligence.

In some cases, a select group of investors in a private equity fund may participate ...