limitedpartner

A limited partner is an investor in a business venture, typically a limited partnership or a private equity fund, who contributes capital but does not participate in the day-to-day management of the business. Their liability is generally limited to the amount of their investment. Limited partners are passive investors whose role is primarily to provide financial resources.

In a limited partnership structure, there are usually two types of partners: general partners and limited partners. The general partners are responsible for the operational management of the partnership and have unlimited liability. Limited partners, on the other hand, have limited liability, meaning their personal assets are protected from business debts and obligations beyond their investment. This distinction is a key feature of limited partnerships, allowing for a separation of management responsibility and capital provision.

Limited partners often include institutional investors such as pension funds, endowments, insurance companies, and wealthy individuals. They expect to earn a return on their investment, which is usually realized through the profits generated by the business or upon the sale of the partnership's assets. The terms of their investment, including profit distribution and withdrawal rights, are typically outlined in a partnership agreement.