GP-LP Alignment
The degree to which a PE fund's structure ties general partner economics to limited partner outcomes. Structural alignment levers include: a meaningful GP commit (1-5%+ of fund size from partner personal wealth), a high preferred return that GPs only earn carry above, a European waterfall that defers carry until fund-level performance is proven, a clawback that recovers overpaid carry, and long carry-vesting periods. Funds with weak alignment (low commit, American waterfall, no clawback, fast vest) face structural drift where GP incentives can diverge from LP outcomes.
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Related terms
Absorption Rate · AFFO per Share · Allowed Return on Equity · Alternative Investments · Anchor Tenant · Assets Under Management
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