Term (Fund Life)
Term is the length of time a fund is expected to operate before liquidation, often 10 years plus extension options.
Allocator relevance: Defines liquidity horizon and governance leverage—extensions and continuation mechanics affect when capital returns.
Expanded Definition
Fund term sets the timeline for investing, managing, and exiting assets. Many funds have a 10-year term with GP-controlled or LP-approved extensions. In modern markets, extensions and GP-led secondaries have become more common, making term and extension language increasingly important.
Allocators evaluate term because it drives liquidity planning and can shift the balance of power late in the fund’s life.
How It Works in Practice
Funds invest during the investment period, then harvest. If assets remain near term-end, the GP may request extensions or propose continuation vehicles.
Decision Authority and Governance
Governance determines who approves extensions and under what conditions. LPAC and LP votes can be critical late in fund life.
Common Misconceptions
- A 10-year fund always ends in 10 years.
- Extensions are rare and harmless.
- Term details don’t matter if performance is good.
Key Takeaways
- Term is your liquidity contract.
- Extension mechanics and approvals matter.
- Late-stage governance is where power dynamics show up.