LONDON, May 30, 2024 (GLOBE NEWSWIRE) -- Preqin, the global leader in alternative assets data, tools, and insights, today announced the launch of Term Intelligence. This latest offering introduces one of the largest searchable databases of Limited Partner Agreement (LPA) terms globally and enables enhanced private fund negotiations. By accessing this innovative database, alternative fund managers, investors, and their legal advisors can expect to benefit from greater clarity when reviewing and benchmarking LPA terms. Ultimately, Term Intelligence makes it possible to see whether the terms are competitive within the market, and whether these terms, as well as the fees and expenses, are aligned with market standards to support LPA negotiations.
New benchmark for LPA terms to provide a comprehensive view of market standards
Preqin introduced Term Intelligence to help mitigate the complications industry professionals face when drafting and negotiating LPA terms. Investment professionals on both sides of the table find the process of investing in a fund, including the legal due diligence and negotiations, to be complex and time-consuming. Prior to the release of Term Intelligence, the industry had limited data on LPA fees and terms and there was a lack of standardization despite the provision of model form LPAs and guidance by the Institutional Limited Partners Association (ILPA) through the ILPA Principles 3.0.
Because of this, it has traditionally been difficult to know which LPA fees and terms meet market rate and, by extension, how to distill the true cost implications across the fund's life. While some large law firms already have an internal database of LPA terms that they have previously worked on, such databases may provide limited insight into market practices for LPA terms. This is because they only have access to their own firm’s past records – making it difficult to win clients in new areas or better serve existing clients in changing markets.
Now with Term Intelligence, investors can conduct thorough pre-investment due diligence on fund terms, with the assurance that they have visibility over an objective baseline for what constitutes a market rate. Meanwhile, fund managers are able to compare LPA terms to a cross-section of funds, helping them draft competitive data-backed fund terms to secure needed capital for fundraising purposes. Finally, law firms can provide data-driven guidance to their investor or fund manager clients and expedite LPA negotiations.
Information captured from LPAs is extracted, reviewed, anonymized, and aggregated by a specialized team of in-house attorneys, before being added to the Preqin Pro platform where clients can easily access it. This underlying dataset represents one of the largest databases of LPA terms globally, covering over 4000 LPAs to feed the growing terms benchmarks.
Nicholas Donato, SVP, Head of Service Providers, at Preqin, said, "We are delighted to bring Term Intelligence to market to allow investment professionals, attorneys, and advisors to benchmark and compare economic and non-economic fund terms to a wide universe of LPAs, providing our clients with the clarity needed to negotiate with confidence.”
Heather Heys, VP, Head of Legal Insights, at Preqin, notes, “There remains real variation in the drafting in LPAs, for example, in how costs are allocated within the partnership. It is of key importance for investment professionals to understand what the market standard is for LPA fees and terms.”
To learn more about Preqin Term Intelligence, click here.
For more information, contact Mimi Celeste Taylor at mimiceleste.taylor@preqin.com
About Preqin
Preqin, the Home of Alternatives™, empowers financial professionals who invest in or allocate to alternatives with essential data and insight to make confident decisions. It supports them throughout the entire investment lifecycle with critical information and leading analytics solutions. The company has pioneered rigorous methods of collecting private data for more than 20 years, enabling 200,000 professionals globally to streamline how they raise capital, source deals and investments, understand performance, and stay informed. For more information visit www.preqin.com.
