[Verse 1] When private equity starts its game The first few years look pretty lame Negative returns upon the screen The worst performance you have seen But don't you worry, don't you fear This pattern happens every year [Chorus] It's the J-Curve dancing down then up First you fall then fill your cup Cash flows out before flows in That's where every fund begins J-Curve, J-Curve, down then high Watch the returns touch the sky [Verse 2] Management fees are paid up front While investments bear the brunt Capital calls drain money fast But value creation's built to last Three to five years you might wait For returns to demonstrate [Chorus] It's the J-Curve dancing down then up First you fall then fill your cup Cash flows out before flows in That's where every fund begins J-Curve, J-Curve, down then high Watch the returns touch the sky [Bridge] Early years show losses steep Portfolio companies need time to leap Operational improvements take their course Exit strategies gather force Then distributions start to flow And that's when real returns will show [Verse 3] Year one through three the curve goes down Negative IRR wears the frown But years four through eight begin to climb As exits happen in their time The J-shape tells the whole PE story From early pain to later glory [Chorus] It's the J-Curve dancing down then up First you fall then fill your cup Cash flows out before flows in That's where every fund begins J-Curve, J-Curve, down then high Watch the returns touch the sky [Outro] So remember when you analyze Don't let early years surprise The J-Curve pattern shows the way PE funds will have their day
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