What is the role of an investment committee in a private equity firm?

The role of an investment committee in a private equity firm is primarily to approve investment opportunities. This committee typically comprises senior members of the firm who assess potential deals, ensuring that they align with the firm's strategic objectives and meet the required risk and return criteria. Their approval is essential as it involves thorough analysis, discussions of due diligence findings, and an understanding of the investment’s market potential and fit within the existing portfolio.

While the investment committee might consider aspects of fund performance indirectly through their investment decisions, monitoring fund performance is generally handled by different teams within the firm, rather than the committee itself. Similarly, managing investor relations and conducting market research are crucial functions but are typically delegated to specific professionals or teams within the firm rather than the investment committee. Thus, the primary role of the investment committee focuses on evaluating and approving investment opportunities that drive the firm's growth and profitability.