Net liquidating equity

net liquidating equity-1net liquidating equity-23

As soon as investments are realized (underlying companies are sold or liquidated after going public), the capital and profits are returned or distributed to the LPs.

Figure 1 presents the typical cash flow and NAV evolution of a private equity fund during its life.

As confirmed by previous performance measures, private equity can produce strong returns.

However, investing in a single private equity fund can be risky as the amount of money lost in bad cases can be relatively high.

On average, liquidated private equity funds with vintages between 19 have an internal rate of return (IRR) of 16.7%Figure 1.