Private equity fund

Private equity funds are typically limited partnerships with a fixed term of 10 years (often with one- or two-year extensions).

At inception, institutional investors make an unfunded commitment to the limited partnership, which is then drawn over the term of the fund.

While billion dollar private equity investments make the headlines, private-equity funds also play a large role in middle market businesses.

[15] A sale of the portfolio company to another private-equity firm, also known as a secondary, has become a common feature of developed private equity markets.

[14] In prior years, another exit strategy has been a preferred dividend by the portfolio company to the private-equity fund to repay the capital investment, sometimes financed with additional debt.