What defines a general partner in private equity?

In private equity, a general partner is crucial to the management and operation of the investment fund. This role involves active decision-making regarding investments, making option C accurate. A general partner typically receives a management fee for overseeing the fund, which compensates them for their ongoing efforts in managing the investments and firm operations. Additionally, they earn a performance fee, often referred to as "carried interest," based on the profits generated by the investments that exceed a predetermined hurdle rate.

This compensation structure aligns the interests of the general partner with those of the investors or limited partners, as the general partner benefits from the success of the fund. Their financial incentives stem from both the management of the assets and the profitable exits from investments.

The other options do not correctly reflect the responsibilities and characteristics of a general partner. For example, a general partner does have significant influence over investment decisions, ensuring their active engagement in the investment process. Additionally, they have unlimited liability, meaning they are responsible for the debts and obligations of the fund beyond just their invested capital. Finally, general partners do raise capital from limited partners, as they play a critical role in soliciting funds to support the investment strategy of the private equity firm.