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Vetting partners

This area covers how investors and lenders examine a sponsor before signing anything. Questions here concern track record, references, litigation history and the authority a general partner holds.

Readers can settle what to request from a sponsor, including the operating agreement, the private placement memorandum, schedules of prior deals and credit references. Roles matter. Other questions cover key person provisions and removal for cause, and what happens to the preferred return, capital accounts, the waterfall and investor consent rights when a general partner is replaced. Family offices and veteran professionals use this material to judge whether a deal partner has the experience and liquidity to carry a project through a downturn.

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