What is a Master Limited Partnership (MLP)?

[Alerian]

An MLP signifies a Master Limited Partnership. Any form of business is
rarely done alone. It involves business partners; partners who invest
together and share any form of profit or loss incurred. Now before
going into details of an MLP, a quick run through of the details of a
partnership will assist.

Any business venture involves two types of partnerships viz. General
partnerships (GP) and Limited partnerships. A General partner is one
who is in direct contact with the company and has equal (or as
mentioned in the contract) share in the dividends of the firm, has
managerial authorization etc. A limited partner, on the other hand has
restricted accountability. They can be compared to shareholders of a
company, who although has a right over a fraction of the dividends
(and losses incurred), has no managerial authorization, neither has
all the privileges of a General partner. The limited partners are paid
dividends by the GPs according to a fraction defined in the
settlement.


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