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ILPA Issues Guidance on GP-Led Secondaries — Key Takeaways

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April 11, 2019
Institutional Limited Partners Association

In response to GP-sponsored secondary activity growth, the Institutional Limited Partners Association (ILPA) has released guidance for its members on these complex and conflict prone transactions. Finbarr O'Connor and Gavin Farrell were invited contributors to ILPA on the guidance note: below, they outline some key takeaways for both GPs and LPs.

  • Communication: Early transparency of the deal process and economics, symmetry of information between buyer and fund LPs, and timely disclosure of conflicts are critical.
  • Role of LPACs: While advocating for all LPs, LPACs and their members should be fully aware of all potential conflicts and consider engaging an independent advisor to act on all LPs' behalf should the complexity of the transaction exceed their risk tolerance.
  • Deal structure: LPs should have the option to maintain status quo. LP consent provided should be contingent on an independent opinion of fair value and upfront disclosure of transaction cost allocations and any changes to fund terms.
  • Third-party advisors: Complexity and conflicts of interest may warrant the engagement of an experienced third-party advisor to act on behalf of LPs. 

Read the ILPA Guidance.

About ILPA
With more than 500 member institutions representing over $2 trillion USD of private equity assets under management, the Institutional Limited Partners Association (ILPA) is the only global organization dedicated exclusively to advancing the interests of LPs and their beneficiaries through best-in-class education, content, advocacy and networking. For more information, visit ILPA.org.

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