The landscape of private equity (PE) investing has evolved dramatically in recent years.
This article examines those trends.
Hold Times in Private Equity have changed dramatically in the last ten years
Hold times, from signing a deal to exit, in PE have followed a U-curve over the past decade from about 5.9 years in 2014, falling to 4.5 years in 2018, then climbing to a record high of 7 years in 2023 as exit markets stalled. While 2024 saw improvement (down to 5.9 years), hold times remain above pre-pandemic levels.
What’s Driving These Shifts?
Several factors extended hold times:
- Federal Rate Hikes: Higher financing costs delayed M&A and exits.
- Valuation Gaps: Sellers held out for past values as buyers became selective.
- Weak IPO Market: Public exits became scarce, lengthening hold times.
- Alternative Liquidity Tools: Dividend recaps and continuation funds enabled partial exits and portfolio flexibility.
The Baseline: 2025–2027 Outlook & Wildcards
Baseline forecast:
Hold times should settle in the 5–6 year range as inflation cools and market backlogs clear.
Wildcards:
A recession or renewed rate hikes could again extend holds. Widespread adoption of evergreen or 15-year vehicles/long-dated funds (e.g., KKR, CVC, Partners Group) might segment the market into “core” (3-5 yrs) and “build-to-core” (10-15 yrs) holding strategies.
Other changing private‑equity trends
Broader PE shifts: fund‑raising has declined for three straight years; add‑on deals and continuation funds now dominate activity along with increased sector specialization, and AI‑enabled value‑creation.
What’s Next for M&A and Private Equity
Consensus among analysts is for a significant increase in M&A activity in 2026, fueled by founder-owned companies coming to market and a rebound in private equity exits. The pandemic‑era exit drought and interest‑rate shock stretched private‑equity hold times to record highs, but data suggests the pendulum is swinging back as markets stabilize and new liquidity tools mature. At the same time, the industry is reinventing itself digitally, operationally and structurally to compete in an AI-driven, increasingly efficient, yet higher‑cost, slower‑growth world. Firms are preparing by investing in digital operations, compliance, and flexible fund structures to capture value in a more competitive, regulated environment.
Key Takeaways
- Hold times peaked in 2023 and are easing, but not back to pre-pandemic lows.
- Add-on deals and specialized strategies increasingly dominate PE.
- The outlook for 2026 is robust. Expect a wave of M&A as markets clear.
Note: Figures cited are median or average buy‑out holding periods (signing‑to‑exit). Hold time excludes dividend recaps and partial exits.
Sources: Bain, PitchBook, S&P Global, CBH, Wall Street Journal, Chronograph, Accenture.
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