Chart of the Week: What Is The Investment Period?

One of the immutable laws of private equity is that firms have a limited period of time in which to invest their funds, often five years (see table below). Another is that buyout firms don’t like investing during credit crunches or before a downturn has bottomed out. Given that the last five years saw both a credit crunch and major downturn, many buyout firms have had to ask their limited partners for extensions of their investment periods. It will be interesting to see if more firms negotiate six-year investment periods (turnaround shop KPS Capital Partners has one) in the months ahead.

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