GP vs LP - Which is better
As the title says, I'm currently trying to grasp which is generally the better route. I understand everyone has their own opinion on which is best, but I'm hoping to learn from you all to make that choice myself. These are the main things I understand about the two sides:
- GP (invests a smaller portion of equity) gets more hands on experience on the deal. Not only sourcing the deal upon acquisition but also executing the business plan to earn a promotion. Business plan work includes leasing, capital plans, development, redevelopment, etc. Lots of local expertise in a given region and asset class. From what I understand the GP typically shares their Argus and excel models with the LP.
- LP (invests a larger portion of equity) gets more deals done given that the GP handles the asset management side of the deal. LPs are more in tune with the financing and capital markets side of investing at a more macro level. They deploy capital quickly by having relationships with many GPs that fit their investment criteria. LP reviews GP's Argus and excel models but also creates their own to challenge whatever the GP is assuming. Therefore working together to make the deal work for both sides.
I'd love to get everyone's thoughts on the following:
- What pays more?
- List of GP firms and List of LP firms
- Which gives you better exit ops?
- Is it easier to go from GP to LP or LP to GP?