Key Person Provision
Private Equity glossary · Private Equity Fundamentals
Definition
An LPA provision suspending the investment period if specified senior partners (the 'key persons,' typically 2-5 founding/senior investment professionals) leave the firm or cease to devote required time to the fund. If triggered, LPs typically have a defined window (90-180 days) to vote to continue or terminate the investment period — providing an off-ramp from a fund where the senior talent that LPs underwrote has departed. The key-person clause is a defining LP protection and a critical fundraising consideration: a key-person event during fundraising can derail a successor-fund process.
Key Person Provision in plain English
A Key Person Provision is a safety clause protecting investors when they hand money to a fund largely because they trust a few specific star managers. If those named people — usually 2 to 5 senior leaders — leave or stop putting in enough time, the fund is forced to pause making new investments until investors vote on whether to keep going or shut it down. It's like signing up for a cooking class specifically because a celebrity chef is teaching it, with a written promise that if that chef walks out, you get to demand your money back instead of being stuck with a random substitute. This matters a lot because investors bet on people, not just the firm's name, and losing that talent can even sink the firm's next fundraising effort.
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