Fund Structure
Key Person Clause
A fund provision allowing LPs to suspend further capital contributions or terminate the fund if a named key GP leaves the fund.
A key person clause (or key man provision) protects LPs from the scenario where the partners they backed leave the firm — fundamentally changing what they invested in. If a named key person (or specified number of key persons) leaves the GP entity, LPs can trigger the key person clause: halting new investments, suspending capital calls, or in extreme cases, triggering fund dissolution. Key person clauses are negotiated carefully: GPs want as few named persons as possible (reducing risk of triggering), while LPs want all important decision-makers named. The clause incentivizes GPs to maintain team stability and succession plans. Key person events don't automatically dissolve funds — they typically trigger a suspension period during which GPs and LPs negotiate a path forward.