In practice
Side letters are usually signed at or shortly after an investor’s closing, and they sit alongside the LPA and subscription agreement. Common contents beyond fees include excuse rights, LPAC seats, co-investment access, and tax or regulatory provisions for specific investor types. Often confused with amendments to the LPA, which bind every partner; a side letter binds only the parties who sign it.
An example
Round numbers, not a real fundSay an investor committing $200 million gets a side letter with a fee discount. Smaller investors do not get it unless an MFN clause applies.
Why it matters
It is how large investors get special treatment, and why other investors ask what is in them.
A definition, not advice; where usage varies the entry says so. Something wrong? Tell the desk.