The lifecycles of private equity (PE) funds are lengthening as managers continue to seek longer fundraising periods. This is due to a number of factors, including increases in due diligence and holding periods for investments as well as complex regulatory frameworks. These longer lifecycles also come at a time when markets are competitive for investors’ dollars and, in turn, for deals.

In order to understand the drivers of these longer lifecycles, and the impact that such a process will have on fundraising, deployment, and returns, Pepper Hamilton commissioned Mergermarket to interview 50 PE partners, directors, and principles from across the United States.

Key findings in the Going the Distance: The Expanding Lifecycles of Private Equity Funds report include:

• 58 percent of those surveyed say that PE fundraising periods for their current fund was longer than the preceding one.
• More than half (56 percent) of respondents say that the timeframe from investment to disposition has increased over the past five years, translating to limited partners’ called capital being illiquid for longer and unavailable for general partners engaged in fundraising.
• Two-thirds of respondents believe that the proliferation of PE firms and funds is behind the longer-lifecycle trend, meaning that managers will have to compete more aggressively to raise new capital.