Describe the role of a Limited Partner (LP) in private equity.

The role of a Limited Partner (LP) in private equity primarily involves providing capital while having limited involvement in the operational aspects of the investments. LPs are typically institutional investors, such as pension funds, endowments, or wealthy individuals, who commit a certain amount of capital to a private equity fund in exchange for a return on their investment over time. They do not engage in the day-to-day management of the portfolio companies that the private equity fund invests in; that responsibility falls to the General Partners (GPs) who manage the fund's investments.

This limited involvement allows LPs to leverage the expertise and management capabilities of the GPs, while still benefiting from the potential high returns associated with private equity investments. By maintaining a passive role, LPs can focus on their overall investment strategy without the complexities involved in managing individual portfolio businesses, which can be particularly resource-intensive and require specialized knowledge.