Most Favored Nation

Privileged Party

This has nothing to do with international trade. For better or worse, not all LPs are treated equally in all private investment partnerships. Indeed, as a condition of their participation, some LPs will negotiate side agreements with general partners obligating the latter to accord them preferential treatment of varying kinds (e.g., enhanced reporting privileges, the right to make co-investments with the fund, or simply better economic terms). To guard against second class treatment, an LP can demand a "most favored nations" letter obligating the GP to extend to it any and all privileges that the GP accords to other LPs by virtue of other side agreements.