Tilden Moschetti: One piece of lingo you oftentimes hear in the
syndication world is the phrase GP or LP, or general partner or
limited partner. What are these mean and how do they apply to
you? Well, my name is Tilden Moschetti. I am a syndication
attorney with the Moschetti Syndication Law Group
specializing in Regulation D Rule 506b and 506c offerings. We
are going to go through what that phrase what those phrases
mean the definitions and how they apply.
Use of the term GP or LP, which stands for GP general partner,
or LP limited partner, are actually an anachronism I say
it's an anachronism because it refers to a structure under a
LP, which is a form of which is a organization that set up as a
limited partnership. Limited Partnerships still exist, and
they're still very useful under very specific circumstances.
However, most people who are doing syndications and private
offerings have moved away from doing LPs. And I've moved to
putting their their projects, their assets and the
opportunities in LLC is limited liability companies. The reason
is, is that over time, investor sentiment itself has shifted
that need to so that investors could feel more secure about
what their own rights were in an LLC, rather than an LP. So a GP
or the general partner is you, you are the sponsor of it. So
it's you who have some liability as it relates to the fund
itself, you know, how it works and how it functions. So when I
say GP, sometimes I'm talking most of the time I'm talking
about the manager are the sponsor, they're all the same
person. So the GP is that person who's kind of in charge of it,
they have some liability, but they're the ones who also are
profiting from some of the all the work that they're doing.
They're actively engaged in the syndication, or in the fund
itself. LP are the investors, so the LP limited partners. So
they're the people who have basically no liability at all,
except to the extent of the cash that they've invested in the
Fund, or into the syndication. So that's the limit of their
liability. And then they are then completely passive in the
role in the way that most limited partnerships are set up,
or nearly all of them is so that LPS have no voting rights and no
control whatsoever. An LLC may have some voting rights for
their investor members, but not always. So there always needs to
be some voting rights available, but it will be very, very
curtailed to much less. So that's what a GP is, and an LP
is and how they fit into syndication. So yes, we use
those terms. They're not actual constructs within an LLC itself,
but we do create the scaffolding around it to create basically
the same type of thing. And for short, most of the time you will
hear a syndicator sponsor or an attorney talking about a GP or
an LP role. My name is Tilden Moschetti. I'm a syndication
attorney with the Moschetti Syndication La. Let me know if I
can help you