General partner expenses
Unlike permitted fund expenses (e.g., operational and organizational expenses), investors’ capital contributions and deal proceeds cannot be used to cover those expenses which the general partner and the management company must bear.
General Partner Expenses
- Expenses of the general partner outside of the fund are generally limited
typically limited to auditing and legal expenses.
- This is because the general partner does not have employees (and therefore does not have salary expenses).
- Also, the general partner will generally be able to look to the fund indemnity to cover litigation or extraordinary expenses.
- The general partner’s source of cash to cover its expenses is limited to
distributions it receives from the fund and capital contributions from its
partners.
- The management company or its principals will often advance the payment of the general partner’s expenses
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