Certain Considerations Associated With A Limited Partner Default In A Private Equity Fund

Many public and private market participants predict the economic effects of the COVID-19 crisis will be long term and widespread. In this regard, given that many health experts are expecting we may soon encounter a second wave of the virus that may be even more damaging than the first one, now may be a good time for sponsors of private equity funds (PE Funds) to consider the impact the crisis may have on its PE Funds arising out of certain likely effects on PE Fund investors (Limited Partners). During the financial crisis of 2008-2009, investors in PE Funds experienced illiquidity in various parts of their portfolio that were previously thought to be liquid. Large declines in the valuations of public market securities can leave investors overallocated to PE Funds, given that PE Fund valuations generally do not decline as quickly as the public markets. In addition, dividends and other distributions from investments may be delayed or terminated altogether. At the