What Do GPs and LPs Want From Each Other?
A survey conducted in 2019 by RFG in conjunction with the Financial Executives Alliance reveals the answer. LPs were asked “How can GPs make your life simpler?” and GPs were asked “What can LPs do better?"
The results are in; and just in time, as LPs and GPs are looking for new ways to navigate the challenges of our pandemic-fraught market. Not surprisingly, better communication was the sought by each group—but the areas of focus differed. LPs cited the need for more standardized reporting and greater transparency in fees, expenses, and GP interactions with regulators. LPs also found the contracting process to be relatively one-sided; they argued that LP agreements should be standardized with respect to representations, warranties, and notifications, regardless of an LP’s size. GPs asked LPs to be more transparent on keys issues and during the fundraising process. Help with deal flow also topped the list of GP concerns.
How do the lessons gleaned from these results apply to our current market, which has changed radically and irrevocably almost overnight? “GPs and LPs were craving improved communications long before the great challenges of the pandemic arose,” says Deborah Prutzman, CEO of RFG. “But the need to connect holds even more weight in today’s environment, where the importance of clear internal and external communications is thrown into sharp relief as teams work remotely across the globe.” Prutzman cites the unique dynamics of the private fund relationship where a tension is often created between trust and vigilance, as the parties balance their own needs against the optimal course for all. She hopes the survey insights will be helpful to LPs and GPs as they navigate the challenges ahead.
A copy of the survey can be found here.