One of the LPs asked me what happens if a company has not exited by the time the fund closes (if it is a ten year fund and a startup we have invested in hasn't had an exit) - what is the response? How do we disperse funds if the startups are still operating? Do we have to sell the shares we own in a private market or somehow the founders are required to show us returns or what happens if there is no liquidation?
Most funds will request a 1 or 2-year extension at that point. Then, you may distribute the equity back to LPs or you may chose to liquidate in the secondary markets.