Garrett James Black July 22, 2016
After climbing steadily for several years, the median hold period of U.S. PE-backed companies roughly leveled off between 2013 and 2014. From there, the hold period for companies exited via IPO briefly leapt upward in 2015, only to plunge once more this year—probably more a reflection of the recent scarcity of IPOs than anything else—while hold periods for companies exited via secondary buyouts and strategic acquisitions also fell.
Interestingly, the exit route that saw the steepest decline was PE-to-PE, which has several implications, as this number isn’t skewed at all given the considerable number of SBOs that have occurred thus far.
It’s illustrative of the twin, often-competing pressures GPs are currently facing: the need to put capital to work and the lack of original targets. Both are symptomatic of how the buyout cycle is slowly winding down.
Note: This column was previously published in The Lead Left.