Every year, MJ Hudson surveys the terms of a broad sample of recently-closed private equity (PE), venture capital (VC) and growth capital funds, where we have advised either the fund manager or at least one investor. In July, we looked at recent trends in fund economics. In October, we put GP/LP alignment under the spotlight. This month we examine how key investor protections are faring in LPAs.
Removal for cause
GP removal is the “nuclear option” of investor protection. It comes in two basic forms. For-cause removal allows LPs to vote out the management team in the event that they commit some serious error, such as fraud, gross negligence, material breach of the fund documents, bad faith, wilful default or violation of securities laws.
MJ Hudson works with clients in the fields of law, international administration, fund management, investment advisory, and IR and marketing, across both alternative and traditional asset classes.Gresham House Strategic PLC (LON:GHS) has a 1.3% ownership of MJ Hudson as of June 2018.