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Words matter

ILPA, Cambridge push for switch to gender-neutral ‘key person’

The Institutional Limited Partners Association and Cambridge Associates are trying to ignite an industrywide conversation on diversity by using "key person" in place of "key man," a term featured in a highly consequential provision in limited partnership agreements.

The two organizations have taken the pledge — joined by a dozen private equity and venture capital firms — to switch to the gender-neutral "key person" phrasing in all legal references, including in limited partnership agreements.

Key-person clauses in private equity contracts generally provide that the manager must stop making new investments with partnership capital should a specified number of key executives cease spending a set amount of time on the partnership.

As part of the campaign to effect change and establish the "key person" terminology as the industry standard, general partners, limited partners, advisers, funds of funds, law firms and others are invited to share their own commitment in a public statement and on social media using the hashtag #keypersonpledge.

"Every little bit helps to forward the conversation of gender diversity. … Words absolutely matter," said Andrea Auerbach, a managing director and head of global private investment research at Cambridge Associates LLC in Menlo Park, Calif.

"The key-person clause is something that all investment professionals look at, evaluate and want to understand," Ms. Auerbach said in an interview.

Using gender-neutral terminology "sends a message to all potential investors, existing investors or female executives you are trying to attract that, 'We are thinking about you,'" Ms. Auerbach said.