Explain what a general partner does in running a private fund and what it owes the fund's investors
The idea
The GP raises the fund, sources and screens deals, carries out due diligence, then structures, prices and finances each acquisition. After closing it oversees portfolio companies through board seats, operational support and management incentives, and it plans and carries out exits. It calls and distributes capital, values the holdings and reports to limited partners, often answering to an LP advisory committee. The GP bears unlimited liability, usually through a special-purpose entity, owes fiduciary duties and normally commits some of its own capital. The trap is to overlook conflicts: allocating deals across funds, transaction and monitoring fees charged to portfolio companies, cross-fund trades, and generous valuations made just before a new fundraise.
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