Venture Capital and Private Equity Contracting

Chapter 5. Limited Partnership Agreements

5.1. Introduction and Learning Objectives

Limited partnerships are the most common form of organization of venture capital and private equity funds in the United States. Because investments in private entrepreneurial firms typically take between 2 and 7 years to bring to fruition in exit (Chapter 19), private equity limited partnerships themselves typically last for 10 years, with an option to continue for an additional 3 years to ensure that the investments have been brought to fruition and the fund can be concluded (Gompers and Lerner, 1996, 1999a,b,c; Sahlman, 1990). Other countries that allow limited partnership structures have also used such structures.^[1] Private equity funds that operate in countries ...