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General Partner (GP)

A General Partner (GP) is an owner of a partnership who has the authority to manage the partnership’s business operations and holds unlimited liability for the debts and obligations of the business. GPs are commonly found in private equity and venture capital firms, where they are responsible for raising capital, making investment decisions, and managing the fund. In return, GPs receive management fees and a share of the profits (carried interest). Their role is crucial for the success of the partnership’s investment strategy.

Example

In a venture capital firm, the General Partner raises funds from investors, selects promising startups for investment, and actively manages the portfolio to generate returns for the limited partners.

Key points

• Manages the operations and investments of a partnership.

• Holds unlimited liability for partnership debts and obligations.

• Receives management fees and a share of the profits from successful investments.

Quick Answers to Curious Questions

GPs are responsible for managing the fund, making investment decisions, raising capital, and overseeing daily operations to ensure the partnership’s success.

GPs face unlimited liability, meaning they are personally responsible for the partnership’s debts and legal obligations, making risk management crucial.

GPs earn management fees and carried interest, which is a share of the profits generated from the partnership’s investments, incentivizing them to achieve strong returns.