By Jordan Rothberg, Senior Manager, U.S.
The first half of 2025 saw a 23% year-over-year decline in capital raises, creating one of the most challenging fundraising environments in recent years. As GPs compete for a smaller pool of capital, side letters have evolved from rare exceptions to central features of fund negotiations, fundamentally reshaping how private equity firms operate and govern.
Writing for Private Equity Professional, I explored how LPs are increasingly requesting bespoke terms spanning fee breaks, preferential liquidity, enhanced transparency rights and jurisdiction-specific provisions. This personalization now extends deep into accounting, reporting and operational workflows, requiring coordination across legal, finance, compliance and fund administration teams.
The challenge for GPs is acute: accommodate bespoke demands to secure capital or preserve operational simplicity for long-term efficiency. Without centralized infrastructure, firms rely on fragmented data and manual workarounds that introduce compliance risks and execution errors.
Leading firms are shifting from reactive accommodation to intentional design, embedding side letter execution into core fund operations from day one. By leveraging technology-enabled workflows and experienced administrators, they’re making personalization operationally sustainable while maintaining control, transparency and governance at scale.
