In many cases, domestic hedge funds are structured as limited partnerships with a general partner receiving the performance allocation and a separate limited liability company serving as the investment manager and receiving an asset-based investment management fee.  In such structures, the general partner itself may be a limited partnership or limited liability company, with the principals of the hedge fund manager serving as the limited partners or general partner, or members or managing member.  (Such limited partners, general partner, members or managing members are collectively referred to herein as “GP limited partners.”)  The formulas by which GP limited partners are compensated are complex, and the stakes are frequently high.  In the best case scenario, the complexity inherent in valuing many of the assets held by hedge funds makes it challenging to accurately effectuate the compensation formulas for GP limited partners.  However, the challenge is compounded when a GP limited partner seeks to leave a hedge fund general partnership, and the challenge is further compounded when the hedge fund holds illiquid or esoteric investments.  Business “divorces” are always difficult.  But in the case of a hedge fund, the difficulties are much greater than in the termination of other business arrangements.  Redeeming the holdings of GP limited partners, and estimating the impact on investors, requires an accurate valuation of the fund’s current assets and a reliable estimate of its future performance.  Both, and especially the latter, are extremely hard to arrive at.  A typical and often effective solution is to apply a series of alternative valuation methodologies.  But this approach creates added challenges because it can produce widely disparate results.  Yet the worst case is to leave the valuation methodology and the terms of the distribution rights unaddressed or unclear in employment agreements or other documents embodying the formulas for compensating GP limited partners.  The combination of illiquid investments, ambiguous general partner distribution, redemption or compensation rights, and unclear valuation methodologies is a perfect recipe for litigation.  And litigation among GP limited partners can be especially costly to hedge funds and their managers: it may lead to disruption of the fund’s trading strategy and may also result in a loss of investor confidence.  To achieve an efficient and harmonious breakup, guidelines are needed.  With the goal of helping hedge fund managers structure and implement such guidelines, this article discusses: the process by which hedge fund general partnership interests and hedge fund assets are valued; the valuation implications of the departure of a GP limited partner; three specific alternative valuation methods for valuing GP limited partnership interests; consequences of ambiguously drafted or nonexistent distribution agreements; specific guidelines for drafting valuation guidelines in hedge fund general partnership agreements (including a four-part taxonomy of hedge fund strategies for valuation purposes); and two case studies in which GP limited partners took opposing approaches to providing a valuation methodology for departing partners, with radically different results.