Limited Partnership and General Partnership

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coritani

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Hi everyone,
I really have trouble understanding what is the “General Partners” (GP) of a private equity (PE) funds.
As i see it, there are limited partners who just give capital to the fund to be reinvested in portfolio companies. They are basic rich investors.
On the other hand, there are General Partners who manage the PE funds.
What i do not understand is why we are talked about the capital of GP ? As (i may be wrong) they are not supposed to provide capital but to manage the PE fund.
Why are they liable for all the firm’s debts ??? For me, a GP is for example Tim Cook from Apple, managing but not involving his own money…
Can somebody enlight me on this ?
Help would be very appreciated…
Thanks
 
Well just went through AI material. I am not expert for PE area so take my answer with reserve..
This is how I see this situation.
LP are limited liability partners while GP is full libaility partner. Key words that are all partners unlike the mentioned situation at corporate CEO (such as Tim Cook).
As I learnt from topic, GP also has his share in fund’s asset (NAV) in form of carried interest.
There may be provisions (clawback, etc) which protect LP from irresponsible, incompetent or in any way compromised GP.
This is how I see the term “the capital of GP”. He is one of the participants in fund’s waterfall.
 
GP has control of funds money and can for instance run away to Paraguay with the dough. Make no mistake, Tim Cook could also be liable if he embezzled Apple resources. So far so good. Why do you think they are paid fortunes? Because it is a serious responsibility.
As regards GP capital, I assume they are also invested and have interest in the funds. Anyone with firsthand experience?
 
krokodilizm wrote:
Why do you think they are paid fortunes? Because it is a serious responsibility.
Click to expand...
And because there are, probably, less than a few people in the world that could carry the company in the same way they do.
 
Coritani,
Look at it simple, there are investors with money in the pocket but no investment expertise or time to do the job, so they feed funds with other LPs to run business. GP is the chosen one to direct the investment plan and do the best it can, of course they are paid. GPs are very restricted with provisions written on contracts and they can also lose their private belongings (house, car, even clothes, lol) if the fund goes terribly (not enough commited capital to pay liabilities).
 
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