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a better monday - LP Liquidity & Redemption Options

Working Document — March 2026

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Context

Many institutional LPs remain hesitant about evergreen fund structures. The open-ended nature, the lack of a defined exit date, and the absence of familiar mechanics like capital calls, distribution waterfalls, and hard close timelines create uncertainty. LPs are accustomed to the clarity of closed-end funds: they know when their capital goes in, when it comes back, and what governance applies along the way.

a better monday recognises this tension. Rather than forcing LPs into a pure evergreen model or retreating to a traditional closed-end structure, the fund aims to create closed-ended style mechanics within a simplified evergreen approach. The goal is to give LPs the comfort and predictability they expect from closed-end funds while retaining the flexibility that an evergreen structure provides for a progressive exit model.

Any fund would be co-created with the cornerstone to LPs, the aim of these options are to present options to facilitate the conversation.

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The Core Problem

a better monday operates an evergreen fund structure with a progressive exit model: rather than selling portfolio companies outright, equity is gradually sold back to employees over approximately ten to sixteen years. This generates predictable, recurring cash flow, but it ramps slowly. Early in the fund's life, distributions are modest relative to committed capital.

This creates a fundamental tension for early LPs. They're funding the hardest, least-proven phase of the model, but the fund's cash generation won't fully mature for years. During that period, LPs lack a clear path to full redemption. They can receive ongoing distributions as the progressive exits generate cash, but those distributions alone won't return their capital plus meaningful appreciation within a timeframe most institutional investors would consider acceptable (typically ten to fifteen years).

The challenge is compounded by the absence of a proven secondary market for fund interests. Without established buyer demand for LP stakes, there's no external liquidity mechanism to bridge the gap between what the fund distributes and what early LPs need in terms of redemption optionality.

In short: how does a better monday provide early LPs with credible redemption assurances while maintaining the flexibility of an evergreen structure and staying true to its employee ownership mission?

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Option 1: Full Lifecycle - Distribute and Transition to Steward Ownership

The fund operates as an evergreen vehicle and runs the flywheel. Distributions flow to LPs as the progressive exits generate cash. The commitment is to deliver a defined return (3x - 6x) on invested capital over the fund's life. Once that threshold is reached, the fund transitions ownership to a steward ownership/cooperative conglomerate model with employee ownership at its core. LPs are fully redeemed through cumulative distributions, and the fund's ongoing economics shift permanently toward mission alignment.

This option requires no secondary market and no external capital raise. It is the simplest structure. The trade-off is that LPs must accept a longer hold period and trust the progressive exit model to deliver. There are no accelerated redemption mechanisms. Returns come when the cash comes.

Best suited for: LPs with long time horizons and strong mission alignment who don't require interim liquidity.

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Option 2: Secondary Market Redemption

The fund operates as an evergreen vehicle but offers LP redemptions at approximately year fifteen, facilitated through a secondary market. The purpose of the secondary is specifically to provide liquidity for initial investors, not to fuel additional fund growth or new acquisitions. At that point, existing LP stakes are offered to new investors who value the fund's proven, repeatable cash flow.

Secondary buyers would enter at a price based on a multiple of distributable income (not net asset value), which avoids the volatility of marking partially exited assets quarterly. For incoming LPs, the attraction is immediate, predictable distributions from a mature portfolio. For exiting LPs, the secondary provides a clean redemption at a fair value reflecting the fund's demonstrated economics. Capital raised through the secondary flows directly to redeeming LPs rather than back into the fund.

Similar to the model in Option 1, once the agreed returns are delivered the fund would transition towards mission alignment through steward ownership or collective cooperative structure

The risk is that this secondary market doesn't yet exist and may not materialise with sufficient depth. This option therefore carries execution risk around buyer demand at the point of redemption.

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Option 3: GP-Led Continuation with Documented Redemption Commitment

The fund operates as an evergreen vehicle, but the GP provides documented commitments around LP redemption within an agreed timeframe. Specifically, the GP commits to facilitating redemptions by raising continuation capital from new investors or via debt. If continuation capital cannot be raised, the GP commits to selling underlying assets to fund LP redemptions.

This gives early LPs the strongest assurance: they know there's a backstop. The GP is putting skin in the game by committing to actively source redemption liquidity, either through new capital attracted to the fund's proven cash flows, or through asset sales as a last resort. The redemption timeline and formula are documented in the fund's governing documents, removing ambiguity.

For new investors entering via the continuation, the proposition is attractive: they're buying into a portfolio with demonstrated, recurring distributions priced on an income multiple. For early LPs, the documented commitment removes the fear of being trapped in a structure with no exit.

Similar to the model in Option 1, once the agreed returns are delivered the fund would transition towards mission alignment through steward ownership or collective cooperative structure

This option most closely mirrors closed-end mechanics within the evergreen wrapper. LPs get a defined redemption window, a formula-based price, and a contractual backstop, all without the rigidity of a traditional closed-end fund.

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Table 1

Table 1

Description

Option 1 - Full Cycle

Option 2 - Secondary Redemptions

Option 3 - GP continuation

Structure

Evergreen

Redemption mechanism

Cumulative distributions

Secondary market

GP-led continuation or asset sale

LP exit certainty

Low (dependent on cash flow timing)

Medium (dependent on market)

High (contractual commitment)

GP commitment

Run the flywheel

Facilitate secondary

Raise capital or sell assets

Closed-end familiarity

Low

Medium

High

Mission alignment

Strongest (steward ownership transition)

Strong

Complexity

Low

Medium

High

There are no rows in this table

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