What is Private Equity?
Private equity (PE) is a form of investment where specialized firms raise capital from institutional investors (pension funds, endowments, sovereign wealth funds) and high-net-worth individuals, then use that capital to buy companies, improve them, and eventually sell them for a profit. Unlike public market investing where you buy shares on a stock exchange, PE firms typically acquire entire companies or controlling stakes, take them private, and work hands-on to increase their value over a multi-year holding period (usually 3-7 years). PE firms are structured as partnerships. The firm itself is the General Partner (GP), making investment decisions and managing portfolio companies. The investors who provide capital are Limited Partners (LPs). The GP earns a management fee (typically 2% of committed capital annually) and carried interest (typically 20% of profits above a hurdle rate). This “2 and 20” structure aligns interests: the GP makes the most money when investments perform well. The PE industry manages over 10B+) to lower middle market shops ($50-500M fund sizes).The Fund Lifecycle
Fundraising
The GP raises a new fund by pitching LPs on its strategy, track record, and team. A fund typically has a 10-year life with a 5-year investment period. During fundraising, the GP sets a target fund size and begins collecting capital commitments from LPs.
Deal Sourcing & Screening
Use
/source to discover target companies, check your CRM for existing relationships, and draft personalized founder outreach emails. Use /screen-deal to quickly evaluate inbound CIMs and teasers against your fund’s investment criteria.Due Diligence
Once a deal passes initial screening, the team conducts deep diligence. Use
/dd-checklist to generate a workstream-by-workstream tracker, and /dd-prep to prepare for management meetings, expert calls, and customer references.Financial Analysis & IC Approval
Use
/unit-economics for revenue quality and cohort analysis, /returns to model IRR/MOIC sensitivity, and /ic-memo to draft a complete investment committee memo synthesizing all findings.Post-Close Value Creation
After acquiring a company, the real work begins. Use
/value-creation to build the post-acquisition roadmap and /portfolio to monitor performance against plan.Key Metrics
Understanding PE performance requires familiarity with a few core metrics:| Metric | What It Measures | How to Calculate | What “Good” Looks Like |
|---|---|---|---|
| IRR (Internal Rate of Return) | Annualized return accounting for timing of cash flows | Discount rate that makes NPV of all cash flows = 0 | >20% net |
| MOIC (Multiple on Invested Capital) | Total return as a multiple of equity invested | Exit Equity Value / Equity Invested | >2.5x |
| DPI (Distributions to Paid-In) | Cash actually returned to LPs as a multiple of capital called | Cumulative distributions / Cumulative capital called | >1.0x means LPs have their money back |
| TVPI (Total Value to Paid-In) | Realized + unrealized value as a multiple of capital called | (Distributions + Remaining NAV) / Capital Called | >1.5x for funds still investing |
IRR and MOIC can tell different stories. A deal that returns 2.0x MOIC in 2 years has a much higher IRR than one returning 2.0x in 5 years. PE firms typically target both metrics: a minimum IRR (often 20%+) and a minimum MOIC (often 2.5x+).
Commands
/screen-deal
Screen an inbound deal (CIM or teaser) against your fund’s investment criteria
/source
Source deals — discover companies and draft founder outreach
/dd-checklist
Generate a comprehensive, sector-tailored due diligence checklist
/dd-prep
Prep for a diligence meeting or expert call with targeted questions
/ic-memo
Draft a structured investment committee memo
/returns
Build IRR/MOIC sensitivity tables across entry, exit, and growth scenarios
/unit-economics
Analyze ARR cohorts, LTV/CAC, net retention, and revenue quality
/value-creation
Build a post-acquisition value creation plan with EBITDA bridge and 100-day plan
/portfolio
Review portfolio company performance against plan
/ai-readiness
Scan the portfolio for the highest-leverage AI opportunities
Skills
Each command is backed by a skill that encodes deep domain knowledge for the workflow.| Skill | Purpose |
|---|---|
deal-screening | Rapid CIM/teaser evaluation against fund criteria |
deal-sourcing | Company discovery, CRM check, and founder outreach drafting |
dd-checklist | Comprehensive, sector-tailored diligence tracking |
dd-meeting-prep | Targeted question lists, benchmarks, and red flags |
ic-memo | Structured IC memo drafting from diligence findings |
returns-analysis | IRR/MOIC modeling with sensitivity tables |
unit-economics | ARR cohort and customer economics analysis |
value-creation-plan | Post-close EBITDA bridge and 100-day planning |
portfolio-monitoring | KPI extraction, variance analysis, and covenant tracking |
ai-readiness | Portfolio-wide AI opportunity ranking and replay identification |