Syndication Law & The Private Placement Memorandum Attorney GP and LP: Exploring Syndication's Key Players
In the syndication world, you often come across the terms GP (general partner) and LP (limited partner). These terms originated from the structure of limited partnerships (LPs), which are still used in specific cases. However, most syndicators and private offerings have transitioned to using limited liability companies (LLCs) for their projects and assets. This shift was driven by investor sentiment, as LLCs provide investors with a greater sense of security and clearer rights compared to LPs.
The GP refers to the sponsor or manager of the syndication or fund, which is typically you. As the GP, you have some liability related to the fund's operations and performance. You also benefit from the work you put into the syndication as you actively participate in its activities.
On the other hand, the LPs are the investors who contribute capital to the fund or syndication. They have limited liability and are only liable for the amount of money they invest. In most limited partnerships, LPs have no voting rights and no control over the operation of the partnership. LLCs may provide some voting rights to their investor members, but it's usually limited.
While GP and LP are not actual constructs within an LLC, we use these terms as shorthand to describe the roles and relationships within a syndication.
Read more about Reg D Structure - How should you structure your Reg D syndication offering?: https://www.moschettilaw.com/reg-d-syndication-structure/
Read more about Real Estate Fund Structures - Real Estate Syndication Fund Structures: https://www.moschettilaw.com/real-estate-syndication-fund-structures/
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