Common Provisions in Alternative Asset Management
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Brief Introduction
Exploring the common provisions that allocators negotiate with Private Equity, Venture Capital and Hedge Fund Managers.Description
For any Alternative Investment Fund Manager (AIFM), whether managing an open-end fund such as a Hedge Fund or a closed-end fund such as a Private Equity fund (including Venture Capital), common provisions include:
- Fees charged (including the usual management and performance fee - the "carry" in closed-end funds such as in Private Equity);
- Reporting frequency and structure;
- Fund extensions and restructurings;
- For closed-end funds, interest sales governance (for secondaries sales);
- Rules regarding capital commitments - and in the case of closed-end funds, the equalisation process;
- The role of the management team's commitment;
- Key-person events and GP team devotion;
- GP indemnification and exculpation rights;
- Rules regarding the raising of successor funds for closed-end funds;
Although many of these are usually redacted and/or verified by legal experts, it's important for any fund manager to have a basic knowledge of these provisions - both to effectively negotiate when closing new investors, but also to take into account during the fund management process.
Besides fund managers, these provisions are also important for anybody with a significant role in a fund in Alternative Investments, including associates or more senior VPs and principals that wish to one day start their own fund.
Requirements
- Requirements
- Have a basic knowledge of Alternative Investments (Private Equity, Venture Capital or Hedge Funds)