easy · Private Equity
Alpha Fund L.P. has a 'Key Person' clause naming three founding partners.
If two of the three partners leave to start a competing firm, what is the most likely immediate contractual consequence according to a standard Limited Partnership Agreement (LPA)?
- All existing portfolio companies must be liquidated by the GP within 180 days.
- The fund's investment period is automatically suspended, and LPs must vote to restart it.
- The management fee is immediately cut to zero fund-wide until new qualified partners are hired.
- The GP is automatically removed from the fund and replaced by the largest remaining Limited Partner.
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