The waterfall may attract the most attention when negotiating fund documents, but certain non-economic provisions also warrant close scrutiny. To draft the deal-by-deal waterfall version of its model limited partnership agreement (Model LPA), the Institutional Limited Partners Association (ILPA) began by reviewing the whole-of-fund waterfall version it issued in 2019. In the process of creating the deal-by-deal version, ILPA also made other changes to the original language and reissued the whole-of-fund waterfall Model LPA with the updated sections. Many of the non-economic changes made by ILPA’s task force of attorneys from law firms, investors and asset managers reflected decisions to promote LP interests more explicitly in the document, which elicited mixed reactions from GP‑side counsel. This second article in a two-part series discusses the non-economic changes to the Model LPA reflected in both versions and how the Model LPA has affected the PE market so far. The first article
explored ILPA’s reasons for releasing a deal-by-deal waterfall, specifics of the waterfall economics and GP counsel reactions. See our two-part series on ILPA’s subscription credit facilities guidance: “Reiterating the Need for Increased Disclosures on the Use of Facilities and LP Obligations
” (Aug. 25, 2020); and “Sponsor Skepticism Over the Value and Potential Harms of Excessive Disclosures to LPs About Facilities
” (Sep. 1, 2020).