hard · Private Equity & LBOs

From a fundamental alignment standpoint, what is the most acute conflict of interest that fairness mechanisms (independent valuation, LPAC consent, status-quo default) are specifically designed to address?

1. The GP both prices and stands on both sides of the transaction, so it is incentivized to set a transfer price that suits its own carry crystallization rather than maximize value for selling LPs
2. The GP earns management fees on the new continuation vehicle, which mechanically reduces the net return delivered to rolling LPs below the headline gross figure
3. The continuation fund extends the asset's hold period beyond the original fund term, breaching the fund's stated investment horizon and triggering an unwind
4. Rolling LPs face a tax timing mismatch because the sale is a deemed disposition even when no cash changes hands for them

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