By Isla Binnie NEW YORK, Dec 4 (Reuters) – Private equity firms in the United States are on track to cash out more of their investments this year than in 2024 in a welcome recovery for dealmaking, but transactions will need further bolstering to help clear the increasing build-up of older assets on their books, […]
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US private equity exit deals set for second year of recovery, PitchBook finds
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By Isla Binnie
NEW YORK, Dec 4 (Reuters) – Private equity firms in the United States are on track to cash out more of their investments this year than in 2024 in a welcome recovery for dealmaking, but transactions will need further bolstering to help clear the increasing build-up of older assets on their books, data provider PitchBook said in a report on Thursday.
WHAT DOES THE EXIT DATA SHOW?
* Buyout firms have achieved 1,300 U.S. exits – sellingcompanies, taking them public, or moving them into a new fund -through October in 2025, raising an estimated $621.7 billion.This compares with 1,369 exits worth $379.6 billion across allof 2024. * Deal activity sped up in the third quarter, reaching”levels we haven’t seen since (the) end of 2021, beginning of2022,” PitchBook analyst Kyle Walters told Reuters. * Half of respondents to a PitchBook survey said theirprimary area of focus was exiting portfolio companies, while 8%said they anticipate holding off until market conditions becomeclearer. * The median hold period for private equity assetscontinues to trend higher, PitchBook found, standing at 3.9years versus three years in 2022. Around 30% of PE-backed assetsare seven years or older, the report added.
FUNDRAISING
* Total fundraising is set to decline in 2025, but a largerproportion of it, 46% as of end-October, was raised by the 10largest firms, up from 35% in 2024. * The concentration of fundraising at bigger firms reflectsthe challenges to achieving profitable exits, which allowmanagers to return capital to their investors. Lower payoutsleave fund investors “with less capital to allocate to the newvintages,” Walters said. * This has ramifications for exits, as reduced fundraisinglimits new dealmaking, including buying assets from otherprivate equity firms. * Walters said this “private equity flywheel” is pickingback up, but not at the “pace that we either anticipated headinginto the year or the pace that you need to really see theecosystem get back going at full tilt.” * First-time funds face the biggest challenges in attractingcapital, PitchBook added, with 2025 likely to mark a new recordlow for first-time funds raised, below 2024’s level.
(Reporting by Isla Binnie in New York; Editing by David French and Chris Reese)