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Home / Glossary / MFN

MFN

Most-favoured-nation: a clause letting an investor elect into more favourable terms granted to another investor via side letter.

MFN — Most-favoured-nation: a clause letting an investor elect into more favourable terms granted to another investor via side letter.

Where most of a fund's investors hold MFN rights, a concession granted to any one of them can effectively become a concession to nearly all — which is why the very first side letter a manager negotiates deserves as much care as if it set the terms for everyone.

Frequently asked questions

What does MFN stand for in fund terms?
Most-favoured-nation — a clause letting an investor elect into more favourable terms granted to another investor through a separate side letter.
Do all investors automatically get MFN rights?
No — MFN rights are themselves negotiated and often tiered by commitment size, so only investors above a certain threshold may hold them.

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.

Related

Side letterA bilateral agreement giving a specific investor terms differing from the main fund documeLPALimited partnership agreement: the constitutional document governing a fund's economics, gCommitmentCapital an investor has legally agreed to provide, whether or not it has been called.

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