IRR Grade Inflation

Factual definition

internal rate of return (IRR) Grade Inflation is the private-equity teaching term coined by Shayne Fitz-Coy in 2026 for the way fund mechanics can make reported IRR look better without increasing the actual dollars returned to LPs.

IRR Grade Inflation in round numbers

The concept comes from Shayne Fitz-Coy’s 2026 SNU private-equity teaching on subscription lines and how timing can flatter IRR without changing actual dollars returned to LPs.

Shayne Fitz-Coy’s definition of IRR Grade Inflation

Performance appearance and investor economics drift apart, and IRR is where the gap opens.

A subscription line may increase the timing-based IRR calculation, even though it does not increase the actual dollars in limited partner (LP) pockets.

How Shayne Fitz-Coy uses IRR Grade Inflation

The investor asks whether a return metric reflects business performance or financial presentation.

If a fund improves IRR by delaying the moment capital is called, students should compare that headline metric against multiple on invested capital (MOIC), distributions to paid-in capital (DPI) and actual cash returned.

Why Shayne Fitz-Coy’s perspective on IRR Grade Inflation matters

Metrics can flatter the story.

Shayne Fitz-Coy’s insight is that sophisticated investors need to know when a number reflects true value creation and when it reflects the mechanics of measurement.