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Key person provision

A clause suspending the investment period if named individuals cease to devote agreed time to the fund. A core LP protection, and one worth conceding readily as a new manager.

Key person provision — A clause suspending the investment period if named individuals cease to devote agreed time to the fund. A core LP protection, and one worth conceding readily as a new manager.

A key person provision is one of the cheapest credibility concessions a first-time manager can offer — it costs nothing if the named individuals actually stay engaged, and it directly addresses the single risk allocators worry about most in a new, small team.

Frequently asked questions

What happens when a key person provision is triggered?

Typically the fund's investment period is suspended, sometimes requiring an LP vote to resume, until the situation is resolved — the exact mechanics are set out in the fund's governing documents.

Should a first-time fund offer a key person provision?

Generally yes — it's one of the lowest-cost concessions available and directly addresses the risk allocators are most concerned about with a small or new team.

Nothing on this page is legal, tax, or investment advice. SeRuM is not a registered broker-dealer, not a placement agent, and not an investment adviser.

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