Why it's even worse than it looks for the PE exit drought
October 14, 2023
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The US government is not the only one threatening to shut down these days.
The PE industry packed up its "for sale" signs on scores of portfolio companies during the third quarter, a sharp about-face from the prior quarter.
We dive into the factors driving this change as well as other key trends in our quarterly US PE Breakdown, one of our most widely read reports here at PitchBook. Here are the top takeaways from the Q3 edition:
• US PE exit value hit an air pocket in Q3, falling by half from the prior quarter to its lowest quarterly level since the global financial crisis and now down 80%+ from the Q2 2021 peak.
• We track buying versus selling on a dollar basis. Both are down this year, but the deficit is still massive at $475.1 billion. The industry needs to build more "offramps."
• So far so good on the fundraising front. The year is tracking approximately 13% lower but from a record high. CD&R's recent close of a $26 billion buyout fund is a sign that "megafund fatigue" may be turning.
• Lastly on the financing front, wounds are finally healing, and banks are wading back to their traditional role as lenders to large LBO transactions.
While on the surface exits reached a more-than-decade low, it was even worse on a relative basis.
Back in its heyday, it was not unusual for total PE exit value to equal or exceed total value expended by PE firms in a given quarter. In Q3 2023, PE exit value equated to 25.5% of what PE firms announced or closed in buy-side deals. That's the lowest percentage ever recorded by PitchBook going back to 2006.
Exit activity is arguably the most important link in the PE chain of capital formation and a lead indicator of industry growth. Its cash flows recycle into fundraising that feeds into dry powder and fund deployment, and most importantly, fund performance. A large imbalance between selling and buying over a prolonged period can disrupt that cycle and undermine industry growth.
New liquidity solutions and exit offramps will need to be built by the industry to avert a pileup as more funds approach end of life, as we discuss in our recent analyst note, PE Exit Timelines and the Impending Maturity Wall.
Fortunately, those efforts are well underway in the form of secondary funds and continuation vehicles. We expect these deals and announcements to accelerate in the next few quarters, and we will be tracking the new trend closely.
For more data and analysis, download our US PE Breakdown.
The PE industry packed up its "for sale" signs on scores of portfolio companies during the third quarter, a sharp about-face from the prior quarter.
We dive into the factors driving this change as well as other key trends in our quarterly US PE Breakdown, one of our most widely read reports here at PitchBook. Here are the top takeaways from the Q3 edition:
• US PE exit value hit an air pocket in Q3, falling by half from the prior quarter to its lowest quarterly level since the global financial crisis and now down 80%+ from the Q2 2021 peak.
• We track buying versus selling on a dollar basis. Both are down this year, but the deficit is still massive at $475.1 billion. The industry needs to build more "offramps."
• So far so good on the fundraising front. The year is tracking approximately 13% lower but from a record high. CD&R's recent close of a $26 billion buyout fund is a sign that "megafund fatigue" may be turning.
• Lastly on the financing front, wounds are finally healing, and banks are wading back to their traditional role as lenders to large LBO transactions.
While on the surface exits reached a more-than-decade low, it was even worse on a relative basis.
Back in its heyday, it was not unusual for total PE exit value to equal or exceed total value expended by PE firms in a given quarter. In Q3 2023, PE exit value equated to 25.5% of what PE firms announced or closed in buy-side deals. That's the lowest percentage ever recorded by PitchBook going back to 2006.
Exit activity is arguably the most important link in the PE chain of capital formation and a lead indicator of industry growth. Its cash flows recycle into fundraising that feeds into dry powder and fund deployment, and most importantly, fund performance. A large imbalance between selling and buying over a prolonged period can disrupt that cycle and undermine industry growth.
New liquidity solutions and exit offramps will need to be built by the industry to avert a pileup as more funds approach end of life, as we discuss in our recent analyst note, PE Exit Timelines and the Impending Maturity Wall.
Fortunately, those efforts are well underway in the form of secondary funds and continuation vehicles. We expect these deals and announcements to accelerate in the next few quarters, and we will be tracking the new trend closely.
For more data and analysis, download our US PE Breakdown.

Tim Clarke
Lead Analyst, Private Equity
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