Earlier this year, the Institutional Limited Partners Association (“ILPA”) published revisions (the “Revisions”) to its much-heralded Private Equity Principles report introduced in September 2009 (the “2009 Principles”). The 2009 Principles, which were intended to improve the private equity industry by better aligning the interests of limited partners and general partners, were enormously successful (at least with LPs) and were endorsed by over 140 limited partners, including some of the largest and most active in the industry. Many sponsors of new or follow on funds specifically crafted their partnership principles and terms on the suggestions in the 2009 Principles. It didn’t hurt that the ILPA’s efforts the last several years coincided with a difficult fundraising environment, particularly for first-time funds. Nevertheless, many of the proposals in the 2009 Principles posed difficult issues for fund sponsors and provoked some significant criticism of the guidelines. One substantial general partner even reportedly hired lawyers to review the antitrust implications of ILPA’s actions.

The stated purpose of the 2009 Principles and the Revisions is to improve the relationship between limited partners and general partners in three areas: Alignment of Interest; Governance; and Transparency. While the ILPA does not seek the commitment of LPs and GPs to any specific provision (and does not consider the Revisions as a “checklist”), the Association does hope the 2009 Principles as revised will receive careful consideration from sponsors and investors as “best practices”. The Revision also offered three appendices, one covering the best practices for Limited Partner Advisory Committees, a second on Carry Clawbacks and a third on best reporting practices. The following summarizes various provisions of the Revisions.