Asset management partner Chris Townsend provided insights to Mergermarket, discussing how sponsors are faring in the current fundraising environment.
“Managers, unable to lose key LPs, are conceding to friendlier investment terms,” Chris said. He also highlighted the pressure on GPs to liquidate funds quickly to avoid extended management fees. “The pressure is really on GPs to liquidate those funds quickly and stop charging fees into a second year of extension,” Chris noted. He emphasized that T+2 years remains the standard term LPs will typically agree to.
With LPs leveraging the slowdown to demand better terms, “negotiation extends well beyond fees. LPs have also secured tighter key-person clauses, limitations on fund-level leverage, enhanced governance, and even bespoke reporting,” he added.
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