Key person provision
What happens if the person I backed leaves?
Favours the receiving party
What it does
Triggers a suspension of new investments — and often an investor vote on whether to resume or terminate — if a named person departs, dies, or ceases to devote the agreed time.
Why it matters
In an emerging manager's first fund the investors are underwriting people, not a track record. This is the provision that makes that underwriting real, and it is the one most often drafted too loosely to trigger.
What to watch for
- Too many named persons, so departure of the one that matters does not trigger
- A time commitment described as 'substantially all' with no definition
- Automatic resumption after a cure period without an investor vote
- The manager able to designate replacements unilaterally
- No consequence beyond suspension — no termination of the investment period
What to ask for
- A short, specific list of named individuals
- A defined time commitment, and prompt written notice on any change
- Suspension automatic on trigger, with resumption requiring an affirmative investor vote
- Replacement key persons subject to advisory-committee or investor approval
- Termination of the investment period if no resumption vote passes within a stated window
How common is it
Documents filed with the SEC containing the exact phrase “key person event”.
View as a table
| Year | Documents |
|---|---|
| 2019 | 93 |
| 2020 | 107 |
| 2021 | 123 |
| 2022 | 102 |
| 2023 | 105 |
| 2024 | 114 |
| 2025 | 110 |
Real filings using it
- Fortress Net Lease REIT (CIK 0001966394) — 8-K, 2025-04-15
- Fortress Net Lease REIT (CIK 0001966394) — 8-K, 2024-11-20
- TCW Star Direct Lending LLC (CIK 0001916608) — 10-Q, 2023-05-10
Source: SEC EDGAR full-text search (efts.sec.gov). Retrieved 2026-08-30. Counts are filed documents matching an exact phrase, not deals, and EDGAR indexes public-company filings — read these as public-company practice, not as evidence of what private mid-market agreements contain.
What usually gets agreed
Automatic suspension with resumption by majority-in-interest vote is the common structure. Manager-designated replacements subject to advisory-committee consent is a frequent middle ground.
Related
- GP clawback — Requires the manager to return excess carried interest at the end of the fund's life.
- Most favoured nation — Lets an investor elect into terms the manager granted to others in side letters.