What is the life cycle of a private equity fund?

Many funds have a 10-year life cycle. Although, that has been changing in recent years with some funds choosing life cycles closer to 15 or 20 years. Most private equity firms have multiple funds. These funds run on different timelines.

What is the life cycle of a fund?

The fund life cycle theory suggests that funds go through four stages: introduction, growth, maturity and decline.

How long does it take to raise a private equity fund?

Raising a fund can take substantially longer than raising money for a single investment. Depending on interest from investors and the timeline to complete compliance requirements, a sponsor should expect to spend at least six months on a fund, and the process can often take more than a year from concept to close.

Can a GP also be an LP?

GPs are also responsible for attaining capital commitments from investors known as limited partners (LPs). This class of investors typically includes institutions—pension funds, university endowments, insurance companies—and high-net-worth individuals.

The life cycle of a typical private equity fund is ten years, but that ten years generally doesn’t start until the team raises substantial capital and it doesn’t end until all assets are sold. So, the life cycle of a private equity fund may stretch to as long as 15 years.

What is PE fund?

Investing Glossary. A private equity (PE) fund is a collective investment model where money from separate investors is pooled together into a single fund and then used to make investments, most often in various illiquid equity and debt assets.

What is investment life cycle?

The investor life cycle refers to the different stages of investment ownership, from the initial purchase, to the sale of the investment. The most commonly used investor life cycle includes the accumulation phase , the consolidation phase and the spending and gifting phases.