Private Equity Funds Have Clocks. Companies Don't.

A private equity fund raises capital from LPs, invests it in companies using a mix of equity and debt, works with those companies to increase their value, and eventually sells them to return capital.

Raise, deploy, improve, return. Then raise another fund and do it again.

That model has worked extraordinarily well for decades. But it feels like it's coming under strain.

In the early days of private equity, buyouts were often quick flips. Over time, more capital entered the industry and firms dug deeper in search of deals. Those deals became harder, more competitive and more expensive. Average holding periods went from roughly four years to somewhere between six and seven.

But the funds still have finite lives—typically 7–10 years, plus extensions. That's the clock.

Companies don't operate on the same schedule.

They move through cycles of investment and growth. Sometimes those cycles look like S-curves; occasionally they resemble the hockey stick every buyer hopes for. More often, the results are uneven.

A company held for six years may have experienced phenomenal growth during Covid—or nearly been wiped out by it. Today, it may be confronting an entirely different set of challenges, including war, political instability and disruption from AI.

It may be performing well but need more time. It may need to invest in growth just as its owner needs to maximize earnings and prepare for a sale.

There doesn't have to be a villain. LPs need their capital returned. GPs need realizations. Companies need the time and capital to pursue the opportunities in front of them. And the capital markets have their own preferences about which companies and stories they will reward.

How do you marry the liquidity needs of LPs, the timelines of GPs, the growth trajectories of companies and the appetite of the capital markets?

Honestly, I don't know.

But I think it's becoming one of the central questions facing private equity, portfolio companies and limited partners.