What is a Limited Partnership?

29
Apr 2020

A Limited Partnership is an older term that was used for many years to delineate between passive partners and management partners in an entity.  These days we use a Limited Liability Company (LLC) to house all of our legal entities.  LLCs have Members and Classes.  The LP/GP delineation is still used today because of it’s ease of translation from the past.  Today we are technically all Members and there are Class A members (investors) and Class B members (management).  The General Partner (i.e. Class B member) is responsible for making all decisions and retains the liability for the LLC. The Limited Partners (i.e. Class A members) are passive investors but receive liability protection.  In our deals, we are on both sides of the deal – as investors and as management.  It’s important to “put your money where your mouth is”.