medium · Private Equity & LBOs
The 'J-Curve' effect describes the typical pattern of private equity fund returns over time.
At what stage of a fund's life cycle does the IRR typically bottom out and begin to inflect upward?
- Years 1–2 for all private market funds
- Year 7, immediately following the end of the investment period
- Inflection only occurs once the DPI ratio exceeds 1.0x
- Years 2–4 for buyout funds; Years 3–5 for venture funds
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