Glossary · Fund Structures
Limited Partnership (LP)
A limited partnership is a legal entity with at least one general partner that manages it with unlimited liability and limited partners whose liability is capped at their investment.
The limited partnership is the dominant legal form for private equity, venture, private credit and real estate funds and for many onshore hedge funds. The general partner (GP), usually an affiliate of the manager, controls the partnership. Limited partners (LPs) contribute capital, share in profits and losses, and do not participate in management, which protects their limited liability.
The rights and economics of the partners are set out in the limited partnership agreement, including commitments, capital calls, fees, the distribution waterfall and governance. In many jurisdictions partnerships are tax-transparent, so income passes through to partners, who in the US receive a Schedule K-1.
Operationally, LPs require partner-level capital accounts with allocations of income, expense and gain according to the LPA. Pitfalls include allocation errors after late closings, mishandled transfers between partners, and tax allocations that diverge from book allocations without clear tracking.
Related terms
Where this comes up in our work
Launch a Fund
A fund launch is a sequence of dependent decisions. We coordinate them in the right order so the first subscription arrives into a fund that is rea…
Read more →JurisdictionsUS (Delaware)
Delaware is the default home for US private funds and the onshore leg of most master-feeder structures. Fundtec runs the capital accounts, investor…
Read more →StrategiesPrivate Equity
Closed-ended funds run on commitments, calls and waterfalls. Fundtec keeps capital accounts, carry and LP reporting accurate across the full life o…
Read more →Tell us where your operations need to be in twelve months.
A 30-minute scoping call with our team. You leave with a clear view of scope, transition timeline and indicative pricing.