Keyman Clauses: When the Roots are Deep, There is No Reason to Fear the Wind

Diana Ribeiro Duarte, Pedro Capitão Barbosa e João Serra Baptista signed the article entitled " Keyman Clauses: When the Roots are Deep, There is No Reason to Fear the Wind ", published in the digital platform Lexology.

«Private equity has now established itself as a “mainstream” asset class, and an extremely successful one judging from the returns achieved by many of its funds (or deals) during the last few years. When assessing such success there is no doubt that, in addition to market-wide factors, the performance of top-tier funds significantly depends on the knowledge and expertise of key individuals managing those funds and the respective investments and divestments.

In this context, this knowledge and expertise often represents a crucial consideration when evaluating an investment opportunity, especially in illiquid assets such as interests in private companies. It is only natural that, given the relevance of such executives, investors will often seek assurance that those individuals will dedicate a significant portion of their time to managing their investments. For that reason, it has become necessary for investors (v.g. unit holders / limited partners, depending on the fund structure) to find tools to protect them against this risk».

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