VC & PE Glossary
What Is Amendment and Waiver?
Definition
An amendment and waiver is a formal legal change or one-time forgiveness of rights under a contract—common in fund LPAs, loan agreements, and preferred stock to adjust terms without rewriting the entire document.
Useful for: Founders, Investors
Amendment and waiver documents modify existing agreements or temporarily set aside contractual rights—letting parties adapt without starting from scratch.
How it works
Venture debt lenders issue waivers when a borrower misses a reporting date but cures the underlying issue. Fund LPAs require LP supermajorities for material amendments—investment period extensions, fee changes, key-person replacements. Preferred stockholders sign amendments to authorize new financings or revise protective provisions.
Waivers are often narrow ("waive Q2 covenant breach only"); amendments persist until further amended. Counsel tracks consents so unsigned holders cannot later block closings.
Why it matters
- Founders: Proactive lender communication makes waivers routine; surprise defaults cost fees and reputation.
- Investors: Read whether waivers you sign bind only you or require class consent—minority protections matter.
- GPs: LP amendment campaigns consume partner time; plan extensions before the clock expires.
Common mistake
Assuming a friendly investor's verbal "we're fine with it" replaces a signed waiver. Only the documented waiver binds the lender or LP class.
Related ideas
Affirmative covenants, LPA amendments, investor consent rights, and covenant default remedies.
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