How Do Fund Sponsors Resolve A Key Person Event?

Upon the occurrence of a key person event, a suspension period is typically triggered, during which the fund is not able to make new investments. In a previous article, we analyzed the average length of the suspension period and the ways they tend to vary among asset classes. In this article, we examine how fund sponsors resolve a key person event to terminate the suspension period and resume all investment activities.

A key person event occurs when a pre-determined number of critical investment executives are no longer involved with managing either the fund and/or the business of the manager. In almost all cases, resolving a key person event and thereby terminating the suspension period and reinstating the investment period involves seeking a vote from the limited partners or the limited partner advisory committee (LPAC) of the fund. In those instances, the general partner of the fund will typically notify all limited partners of the key person event, and the