Trending Content - Private Equity Forum
| +43 | What are you actually using AI for in PE? | 16 | 6h |
| +33 | Best industry/job for entrepreneurship? | 11 | 3d |
| +27 | Firm not transferring me to NYC | 13 | 5h |
| +24 | Laid off from MM PE - Seeking Help | 9 | 6h |
| +20 | Burn Out in PE - What Comes Next? | 3 | 4d |
| +15 | Buyside in London with nice WLB and pay | 15 | 1d |
| +12 | Value Creation Initiatives (That aren't add-ons) | 3 | 3d |
| +10 | Undergrad summer PE analyst positions | 3 | 5d |
| +9 | Realistic path to Capital Solutions/Spec Sits Groups from LevFin at a BB? | 1 | 6h |
| +9 | Question about HH 2028 | 2 | 4d |
Career Resources
At a high level there are 2 components that drive your returns
So the cash flows are the discount to NAV at entry and the rest of the CFs are the same as any other fund investment (capital calls for fees, investments or fund expenses; distributions for dividends or exits).
Thank you very much for the response Franco, one additional question is how to value the unfunded? Is it fine to use a threshold IRR and net multiple (assuming 15% or 1.5x) and value the unfunded based on the one which gives lower value? However we won't have any cashflows for the unfunded so does it make sense to take the net multiple based on remaining life?
That’s a good question. You have to assume a return on the “new money”. This may be quite different to the existing portfolio depending on the reason for the secondary.
This assumption then flows into the target IRR, which can be adjusted based on the discount to NAV bid price.
Got it understood. Much appreciated Franco. By any chance would you have a draft case study / model which I can refer to so that I have better understanding of how the calculations flow? Would be super helpful.
Qui voluptatem blanditiis molestias optio. Iste eaque dolorum voluptas aut. Fuga ut ut ea enim commodi et odio. Facilis error aut voluptatum suscipit non occaecati deleniti.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...