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Fireside Chat with ILPA: LP Perspectives in the Current Environment

Sep 5, 2023

With deal values, exits and fundraising levels all down, limited partners (“LPs”) have expressed concern about liquidity and have had the upper hand in negotiating fees and terms with managers. In a recent fireside chat, Greg Durst, Managing Director of Institutional Limited Partners Association (“ILPA”) and Kayla Konovitch, Tax Partner, EisnerAmper’s Financial Services Group, discussed the outlook for LPs in the current market environment. Their talk touched on several pressing issues.

Liquidity and Fundraising

LPs’ concerns about liquidity have temporarily curtailed fundraising. To be in the best position to raise capital, LPs expect fund managers to have a robust team in place and to be of institutional quality. Furthermore, funds need to do their part in strategically identifying LPs who can allocate funds to them. Given the lack of available liquidity, the fundraising cycle for emerging managers to raise capital is expected to be longer than normal.

Terms and Fees

On the heels of fundraising challenges for fund managers, LPs have leverage when it comes to negotiating terms and fees, and they are starting to question whether organizational costs should be borne by the fund. For larger funds in particular, LPs are pushing back on management fees, which are becoming harder to justify. LPs expect general partners (“GPs”) to be as transparent as possible and practice good stewardship.

Continuation Funds

Contrary to what many advisors may think, LPs are not enthusiastic about continuation funds. LPs are taking the cash because the underwriting process in their own organization is challenging; it's not worth the time and effort. In addition, when these transactions are executed early in the investment period, when they are premium assets or when LPs are not given enough time to evaluate the transaction, the LPs question whether this is in the spirit of the agreement. When GPs contemplate utilizing a continuation fund strategy, they should take the opportunity to circulate their reasoning with the limited partner advisory committee (“LPAC”) to make certain they are aware of the rationale for the transaction.


Environmental, social and corporate governance (“ESG”) continues to be top of mind for LPs as they evaluate how GPs are addressing these individual components and how they are implemented to manage investment risk. LPs expect diversity at both the GP level and portfolio company level on the premise that diverse teams drive better performance. Although LPs don’t expect all GPs to be impact managers, they do expect them to be able to articulate how they measure impact

What's on Your Mind?

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Eugene Katsman

Eugene Katsman is a Partner and a member of the firm's Financial Services Group. With over 10 years of diversified accounting and auditing experience, he specializes in providing audit and accounting services.

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