Forbes – The death or disability of a hedge fund general partner can easily result in the collapse of the fund. While there are a number of ways to prepare if such unfortunate events occur, many hedge funds – especially start-up hedge funds – are not adequately prepared.
A survey of 164 start-up hedge funds with less than US$100 million in assets and with two or more general partners, found that about 60 percent of them believed their operating or partnership agreement addressed the transfer of ownership in case of death. Another 8.5 percent reported having a buy/sell agreement in place, while 5.5 percent had a side letter. Slightly more than a quarter of the respondents did not know what would happen if one of the partners died.