Chartered Alternative Investment Analyst (CAIA) Practice Exam 2026 – All-in-One Guide to Master Your Certification!

The "fund lifecycle" in private equity refers to a comprehensive framework that includes all critical stages of fund management, which are fundraising, investing, managing, and exiting investments. This lifecycle begins with fundraising, where capital is raised from investors in order to deploy in various opportunities. Once the funds are secured, the investing phase begins, where the private equity firm identifies, evaluates, and acquires target companies or assets.

Following these initial phases, the management phase involves actively overseeing the portfolio companies, optimizing their performance, and potentially implementing strategic changes to enhance their value. Finally, the lifecycle culminates in the exit phase, where the private equity firm looks to sell its stake in the investments, typically through either a public offering, a sale to another company, or a secondary buyout.

Understanding this lifecycle is crucial for grasping how private equity operates, as it encompasses all necessary actions and strategies from the very beginning to the end of the investment process, thereby ensuring a thorough comprehension of how private equity funds function as a whole.