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PE exit multiples have stayed steady at elevated level

Slowly but surely, exit multiples for secondary buyouts and corporate acquisitions have risen over the past two years, with figures for the former topping off at 9.4x last year. Thus far in 2017...

Slowly but surely, exit multiples for secondary buyouts and corporate acquisitions have risen over the past two years, with figures for the former topping off at 9.4x last year. Thus far in 2017, the aggregate figure for all transaction types stands at 9x.


These sustained metrics suggest a confluence of factors: considerable sums of dry powder; opportunistic selling on the part of PE portfolio managers; and current difficulties in proprietary deal flow origination. Sourcing fresh investments is difficult at any time—the maturation of the buyout industry has only rendered it doubly so, leading to a significant increase in sponsor-to-sponsor transactions.

As different firms embrace varying segments of the operational value-enhancing chain key to the buyout investment strategy, they can justify buying previously owned targets given their specialist focus or ampler resources. Hefty levels of dry powder to deploy in combination with still-amenable lending markets, enable more considerable equity contributions, should they be required, without overly levering underlying assets.

Moreover, as PE firms still exit to strategic buyers at significant multiples despite overall slowing M&A activity, it’s clear they are still opportunistically selling off prime or best-placed assets. Testament to PE fund managers’ intense focus on portfolio optimization, this turnover speaks to the pressures PE investors have faced amid general perceptions of a slowing business cycle and artificially boosted asset valuations.

Note: This column was previously published in The Lead Left.

For more data on analysis on PE exits, be sure to download our 2017 PE & VC Exits report.

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    Garrett James Black, CAIA is a manager at PitchBook, leading dual teams of publishing and analysts focused on partner content. The publishing team of editors and designers works closely across multiple teams of PitchBook institutional research analysts to produce all PitchBook industry reports, analyst notes, emerging technology research and more. In addition, they produce the quarterly PitchBook Private Market PlayBook. The partner content team of analysts and project managers focuses on developing custom content with clients and partners, creating bespoke analysis of key segments grounded in PitchBook private markets datasets. Garrett also works with clients directly on key research projects such as the flagship KPMG Venture Pulse series, and deep dives into cutting-edge technical innovation in fields such as agtech and nanomaterials in partnership with select clients.

    He is a CAIA charterholder and obtained a Bachelor of Arts in biochemistry and economics, plus a certificate in computational finance, from the University of Washington.

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