How to Read Key-Person Clauses in an AIF
Understanding the Manager Decision
How to Read Key-Person Clauses in an AIF is ultimately a decision about what must happen for capital to be protected, compounded and returned. The useful starting point is to identify the return engine, the investor obligation and the event that creates liquidity.
Reading Evidence and Attribution
Key-person clauses define what happens when named decision-makers stop devoting the required time; the suspension, cure and investor vote mechanics are central.
Where Manager Diligence Breaks
Marketing records often combine different teams, strategies, fund sizes and market environments. A strong firm-level number can hide weak attribution, low realised cash or a strategy that no longer fits the new corpus.
Making the Selection Decision
Before acting, write down the role of this exposure, maximum capital at risk, expected holding period, source of future funding, evidence still missing and conditions that would stop the decision. For read key-person clauses in an aif, the absence of one answer should change commitment size rather than be covered by confidence in the manager or theme.
Key takeaways
- Key-person clauses define what happens when named decision-makers stop devoting the required time; the suspension, cure and investor vote mechanics are central.
- Marketing records often combine different teams, strategies, fund sizes and market environments. A strong firm-level number can hide weak attribution, low realised cash or a strategy that no longer fits the new corpus.
- Selection should be based on a written mandate and a documented evidence gap list. Unanswered questions should reduce commitment size or stop the decision rather than being replaced with brand comfort.
Related questions
What should an investor verify first?
Key-person clauses define what happens when named decision-makers stop devoting the required time; the suspension, cure and investor vote mechanics are central.
Which documents matter most?
Start with the governing fund or transaction documents, then reconcile the commercial claims with audited reports, portfolio evidence and cash flows.
What is the main downside to test?
Marketing records often combine different teams, strategies, fund sizes and market environments. A strong firm-level number can hide weak attribution, low realised cash or a strategy that no longer fits the new corpus.
How should the final decision be made?
Selection should be based on a written mandate and a documented evidence gap list. Unanswered questions should reduce commitment size or stop the decision rather than being replaced with brand comfort.
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