Limited Partnership Agreement (LPA)

The LPA governs the relationship between the general partner and limited partners of a limited partnership. It covers commitments and capital calls, investment period and term, management fees, fund expenses, the distribution waterfall, carried interest and clawback, allocations to capital accounts, transfers, defaults, key-person provisions, reporting and governance.

For fund operations, the LPA is the rulebook. Every fee calculation, allocation, waterfall and investor report should trace back to a specific LPA clause. Terms are often modified for individual investors by side letters.

Pitfalls include ambiguous definitions, such as what counts as contributed capital or fund expenses, operating from a summary rather than the executed agreement and its amendments, and not converting LPA terms into a documented calculation methodology agreed with the administrator and auditor. Amendments and consents should be tracked centrally so that calculations always reflect the current agreement.