The average private equity fund is currently in its post-investment period. There can be multiple downsides to this for LPs, but post-initial-term management fees, which typically come out of LPs’ commitments and work against TVPI, are a growing concern and are not always known from the outset.
Private equity fund lives are extending beyond 10 years, leading to higher costs due to management fees in extension periods
LPs focus on negotiating against fees in term extensions, which are frequently not specified in LPAs
Despite having more time to grow, longer-lived funds do not perform better on a TVPI basis. The IRR of longer-lived funds is typically considerably lower than that of liquidated funds
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