Private equity firms are holding on to their portfolio companies longer than they have in over a decade.
The median holding period of a US PE-backed company reached 3.4 years at the end of 2024, the longest in over nine years, according to PitchBook’s Q1 2025 Quantitative Perspectives: US Market Insights report.
Historically, PE firms have held their portfolio companies for 3-7 years. By the end of 2024, over 30% of PE-backed companies had been held by fund managers for at least five years, the highest percentage in nearly a decade, according to the report.
Aging buyout firm-backed companies are further evidence of a lack of exit options for fund managers. In 2023, cumulative PE exit value dropped to $277.3 billion, the lowest figure in over a decade, as dealmakers navigated a shifting interest rate policy and widened bid-ask spreads, according to PitchBook’s 2024 Annual US PE Breakdown.
“Some of the calculus involved with being able to sell from one sponsor to the next looks materially different,” said Zane Carmean, PitchBook’s director of quantitative research. “That has the knock-on effect of valuation mismatches between buyers and sellers.”
The lack of exits led to limited distributions to LPs. In 2024, capital returned to LPs across private market strategies—including PE, VC, private debt, real estate and real assets—reached its lowest proportion of net asset value seen since the global financial crisis, according to PitchBook data.
Fund managers, eager to generate returns to their LPs, participated in a record volume of liquidity-generating mechanisms last year. GP- and LP-led secondary transactions, for example, reached a decade-high of $160 billion in total deal value.
GPs also used products like NAV loans and dividend recapitalizations—new debt issued to portfolio companies to pay a dividend to shareholders—to return capital to their investors. In Q1 2024, over 40% of newly issued loans included a dividend recap, the highest share since before the pandemic.
“There was a spike in dividend recaps despite relatively elevated interest rates, and we think that’s all in an effort to create cash returns for investors,” Carmean said.
Featured image by Jenna O’Malley/PitchBook News
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