For anyone who doesn’t work in the field, it may come as a surprise to learn that unlike a hedge fund, which can live on forever, a private equity fund has the same life expectancy as a goat: 10 years.
As a fund approaches the finish line, it has to start shedding its assets. Some funds may have year-long extensions built in but, when time’s up, they have to exit their investments and distribute the profits to investors.
Today, many private equity funds – like the baby boomers – are entering their senior years. The bottom line, says one Calgary private-equity lawyer, is there is a lot of “dry powder” that needs to be spent over the next year or two.
Lexpert contributor Sandra Rubin reports at www.lexpert.ca. Follow @Lexpert on Twitter. Lexpert is published by Thomson Reuters.