General Partner (GP)
Private Equity glossary · Private Equity Fundamentals
Definition
The entity managing a PE limited partnership — binds the fund legally, makes investment decisions, and bears unlimited liability for partnership obligations. The GP earns two streams: (i) management fees (1.5-2% of committed capital during investment period, stepping down post-IP); (ii) carried interest (20% of profits above an 8% hurdle, paid via the waterfall). The GP also contributes capital alongside LPs (the 'GP commit,' typically 2-3% of fund size). GP firms are typically structured with a holding company at the management-company level and separate GP entities sponsoring each fund vintage.
General Partner (GP) in plain English
The General Partner, or GP, is the professional team that actually runs a private-equity fund — it decides which companies to buy, manages them, and signs all the legal deals on the fund's behalf. Think of a fund as a group road trip: the investors put in the gas money, but the GP is the one driving and choosing the route (and legally on the hook if things crash — that's the 'unlimited liability'). The GP gets paid two ways: a yearly management fee (roughly 1.5–2% of the money investors pledged, to keep the lights on and pay salaries) and 'carried interest' — a 20% cut of the profits, but only after investors first earn a minimum return (the 8% 'hurdle'). The GP also puts in its own money alongside investors so it feels the pain of a bad deal, not just the upside.
Also called: GP
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