LPs Push on Key Person Clauses, but Concessions Lag
ILPA's latest survey shows key person provisions are the term LPs challenge most, yet they win concessions barely a third of the time.
NEW YORK, September 28, 2026. Limited partners are pushing harder on fund terms. They are not winning much. The gap between the two is the story.
Key person provisions are the clearest case. Private Funds CFO reported on September 23 on ILPA’s 2025-26 Limited Partners Sentiment Survey. Key person clauses were the LPA term LPs challenged most, at 61 percent. LPs got concessions only 37 percent of the time.
That is a lot of asking for a modest return.
Who counts as key
The fight is over definitions. Private Funds CFO says LPs want fund documents to cover any personnel responsible for investment performance. Founders and titles are no longer enough. A trigger naming two founders protects little if a third partner sources and runs the deals.
It matters more as firms grow. A platform with dozens of deal teams can lose the people who drive returns. A clause written around a name on the cover never trips.
Leverage is still uneven
The survey does not describe a market that has flipped. Buyouts reported that most LP respondents saw only slight improvement in their ability to negotiate. Top-performing firms can still dictate terms.
ILPA’s Neal Prunier explained one reason. “The GP external counsel has their starting point of an LPA and is very, very reluctant to make any changes to the LPA itself, because that LPA serves as, in essence, its marketing document,” he said.
So LPs move to side letters, and each one negotiates alone. Some reach “yes” after seven or eight rounds, Prunier said. Others cannot afford that many. They leave terms on the table.
Prunier’s advice is to pick three or four priorities. The survey found LPs rank three terms highest: key person provisions, carry distribution across the firm, and standard of care.
Where the pressure shows up
Terms are one front. Conflicts are the other. ILPA found conflicts of interest were LPs’ greatest challenge. Continuation funds put the GP on both sides. Retail vehicles may compete with closed-end funds.
Prunier said that “overwhelmingly, LPs would prefer that a CV not be used.” PEI’s LP Perspectives 2026 Study found a majority want more than the usual 20 days to decide whether to sell or roll. Prunier called a process that leans only on a fairness opinion “representative of a failed process.”
Expense scrutiny is rising too. Private Funds CFO’s June fees and expenses survey describes investors scrutinizing “every expense line item in the fund documentation.”
What to watch
Capital is not walking away. Most LPs are at or near target allocations and expect to hold or grow them, Buyouts reported. Yet 72 percent plan to adjust their programs. That includes skipping re-ups with some existing managers.
That is the real leverage. LPs rarely win the clause, but they can decline the next fund. Watch re-up rates and side letter concessions, not the headlines about pushback.