The majority of LPs have at one time or another decided against allocating to a GP because the fees were too high, according Preqin in its Private Equity Spotlight in September. Survey results showed that 61% of investors interviewed for its Fund Term Advisor survey have decided not to commit to a fund due to issues with the proposed terms and conditions.
In fact, says Preqin, 10% reject GPs “frequently” due to unfavourable terms and conditions for them. It is becoming a more weighty decision factor, it seems. Preqin says that “GPs must acknowledge the importance of drawing up terms and conditions for their vehicles that are attractive to investors in order to secure capital and complete a successful fundraise”.