A Broader View of LP-GP Alignment

LP-GP alignment increasingly encompasses not only economic terms, but also confidence in the process through which investment decisions are made.

On September 24, 2026, Mario Mancuso, founder and CEO of DEALSAGE, delivered luncheon remarks at the Regulatory Fundamentals Group Fall Conference in Los Angeles. His remarks, titled “The World Changed. Did Your Diligence?,” addressed how investment processes can remain responsive to changing circumstances without becoming unnecessarily burdensome.

One aspect of that broader subject is LP-GP alignment.

Discussions of alignment have traditionally centered on economics: management fees, carried interest, GP commitments, investment periods and liquidity.

Those matters remain important. But alignment can also encompass the process through which investment decisions are made.

The issue is not whether LPs should participate in individual investment decisions. That responsibility properly rests with the GP. Nor is it whether GPs should disclose the details of every diligence exercise.

Rather, LPs benefit from having confidence that the process used to select investments is sufficiently rigorous, current and responsive to the environment in which portfolio companies operate.

That includes an understanding of whether geopolitical, national security, regulatory and reputational considerations enter the process early enough to inform investment selection—not simply after substantial time and resources have been committed to a transaction.

Alignment Around Investment Process

For an LP, selecting a manager involves more than evaluating strategy, personnel and historical performance. It also requires an assessment of the manager’s judgment and the process through which that judgment is exercised.

For a GP, this creates an opportunity to demonstrate the quality and discipline of its investment process.

A well-constructed process can provide LPs with confidence that the manager is considering the full range of factors that may affect an investment. It can also demonstrate that those considerations are being evaluated at a point when they can still influence the decision to proceed, the allocation of diligence resources and the terms on which a transaction may be pursued.

This does not require LPs and GPs to reach the same conclusion about every potential investment. Alignment does not mean unanimity. It means confidence that decisions are being made through a thoughtful, disciplined and appropriately informed process.

Greater Confidence Without Greater Intervention

Effective alignment should preserve the GP’s authority and accountability for investment decisions. At the same time, LPs should have an appropriate understanding of the principles, capabilities and processes that support those decisions.

Greater confidence does not require greater LP involvement in individual investments. Nor does it necessarily require more diligence.

In many cases, the more relevant question is whether the right considerations are being addressed at the right point in the process.

This distinction matters. A productive alignment discussion should reinforce the GP’s mandate, not dilute it. It should give LPs greater confidence in how investment judgment is exercised without inviting them to second-guess individual transactions.

A Shared Interest

LPs and GPs approach the investment process from different positions, but their interests are substantially aligned. Both benefit when consequential considerations are identified early, evaluated consistently and incorporated into investment judgment.

For GPs, earlier insight can improve opportunity selection, focus diligence resources and support more informed investment decisions.

For LPs, greater clarity can inform the assessment of direct and co-investment opportunities, facilitate more substantive engagement with managers and support effective institutional oversight.

This is not about shifting investment authority from the GP to the LP. Nor is it about introducing another layer of process. It is about giving both parties a clearer and more timely understanding of the considerations that may affect an investment.

DEALSAGE is designed to support both sides of that relationship.

For GPs, it provides a consistent way to identify consequential considerations early enough to inform investment selection and diligence. For LPs, it provides a consistent way to assess direct and co-investment opportunities and to engage managers on the considerations informing investment selection.

The objective is the same in each case: better-informed decisions, made at the point when the information can still be acted upon.

The strongest LP-GP relationships are built on more than aligned economics. They also reflect shared confidence in the quality of the investment process and the judgment it supports.

DEALSAGE thanks Deborah Prutzman of the Regulatory Fundamentals Group for convening and facilitating the conference, and Benjamin Beer of CohnReznick and Carlyn Williams of Arnold & Porter for participating in the program.