Private Equity Glossary

The annualized rate of return that makes the net present value of all cash flows equal to zero.

A multiple measuring total value (distributions plus remaining value) divided by contributed capital.

A multiple measuring actual cash distributed back to investors relative to capital contributed.

The pattern of negative returns in a fund's early years followed by positive returns as investments mature.

The year in which a fund makes its first investment or begins its investment period.

The total amount an LP pledges to invest in a fund over its investment period.

A demand from the GP for LPs to contribute a portion of their committed capital.

Cash or securities returned to LPs from a fund's realized investments.

The current fair market value of all investments in a fund's portfolio.

The manager of a private equity fund responsible for investment decisions and fund operations.

An investor who commits capital to a private equity fund but has limited involvement in management.

The share of fund profits (typically 20%) paid to the GP as performance compensation.

Annual fee (typically 1.5-2%) paid to the GP to cover operating expenses.