The Contractual Governance of Private Equity Funds and Hedge Funds: A Case Study

This chapter examines the contractual governance arrangements of private equity and hedge funds. Section 2 examines the traditional structure and investment strategies of hedge funds and private equity, highlighting the respective benefits and costs of the two types of funds. Section 3 reviews the activity of hedge funds, concentrating on the increasingly important role they play in corporate governance and corporate control. It then considers the variety of investments made by private equity partnerships. Section 4 compares the contractual structure of private equity and hedge funds, describing the terms and conditions of fund formation and operation, and the contractual features that distinguish the two types of funds.