Milbank LLP Corporate partner Rami Turayhi was quoted in a FundFire article discussing how private equity limited partners are increasingly negotiating terms around the future use of continuation funds through side letters during main fund fundraising. Rami noted that these negotiations are adding additional layers to the process of securing limited partner commitments and signaling that the use of continuation vehicles is undergoing a "normalization" within the private equity industry.
In the article, titled "LPs Demand 'Guardrails' on Managers Pitching Continuation Funds," Rami also explained that LPs often focus on ensuring that GPs "crystallize" the carried interest they have collected on a portfolio investment to date and contribute those proceeds to the new continuation vehicle, which helps assure LPs that the manager's interests will remain aligned with limited partners. "Investors are wanting to see more of the GP's own skin in the game," he said.
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