PE case: Catch-up
The investment committee compares funds with different maturity and risk profiles. Catch-up is used as the anchor to compare conservative and ambitious scenarios.
- fund_size_eur:
- 180000000
- tvpi:
- 2.30
- dpi:
- 0.86
- fund_life_years:
- 10
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Private equity⚗ Includes simulator
Catch-up
Catch-up is a concept that clarifies fund performance and GP/LP alignment.
Deep dive
Catch-up helps you separate true performance, timing effects, and risk taken. Helpful formula: define scope clearly and compare two scenarios before deciding.
Key formula
Percentage of catch-up after Hurdle Rate is met.
Real-world examples
Pitfalls to avoid
- Judging a fund too early without considering J-curve dynamics.
- Comparing multiples while ignoring time dimension of cash-flows.
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