Private Equity Mechanics: The Investor Experience

Most private equity funds operate under a 10-year term in which the fund seeks to identify promising portfolio companies, make investments, improve the portfolio companies, sell them, and then return the proceeds to the LPs. It is likely that an investor’s return in the first few years will be negative as the GP makes investments and draws down capital while incurring fees and expenses for the fund. This phenomenon is also referred to as the “j-curve.”






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