PE: investment period vs term ??
what does it mean when a PE fund says they have a 5 year investment period and a 7 year term + approved extension? thanks
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Investment period: time during which the fund will acquire its platform investments. In this case, the fund has 5 years to source and execute its desired number of investments.
Term: total life of the fund, or investment period + harvest period. In this case, all fund investments must be monetized after 7 years (or two years after the end of the investment period).
Extensions: The fund has the option to extend the term, aka give it more time to sell its portfolio companies. This could be because the economic environment is not amenable to an immediate sale at the end of the normal term, or maybe more time is needed to clean up before going to auction.
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