News & Events

Jason Glover, Head of Simpson Thacher’s London Funds Practice, was quoted in a Private Equity International article titled, “Covid prompts flexibility in LPAs.” The article highlighted how pandemic-related liquidity issues have prompted some private equity sponsors to revisit fund terms and negotiations with limited partners. The article also examined other market trends emerging in the last year that may have an impact on greater flexibility for new fundraisings. For example, the article touched on follow-on provisions, which allow for additional capital to go into a portfolio company to enhance or protect its value. However, these provisions can be limited to a certain amount of money, to prevent concentration in a given asset, or to a certain timeframe after the commitment period had ended.

“We have always drafted those follow-on provisions so managers are not time constrained, but we are an outlier,” said Jason. “Lots of investors stipulate that follow-ons can only occur for up to two or three years after the commitment period has ended. I suspect across the market a lot of managers still have restrictions on follow-ons and that will be a cause for concern and a discussion point going forward.”

To read the full article, please click here (subscription required).