Most-Favored-Nation (MFN)

Private Equity Glossary

An LPA/side-letter provision granting an LP the right to receive the benefit of more favorable terms that the GP grants to other LPs in their side letters — protecting the LP from being economically subordinated to peers via side-letter concessions. Typically limited to LPs above a commitment threshold (e.g., $100M+) and with carve-outs for sovereign/regulatory-driven provisions (e.g., sovereign immunity, ERISA-specific terms) that legitimately differ across LP types. Operationally, the GP must disclose all material side-letter terms to MFN-eligible LPs, who then elect which terms to import — a complex and often contentious post-close exercise.

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