- Private equity firms still face a large backlog of about 12,900 unsold portfolio companies, with holding periods stuck near seven years.
- Although dry powder has fallen from its 2024 peak to roughly $880 billion, undeployed capital and aging assets continue to strain returns and fundraising.
- Exit activity and IPOs, highlighted by Medline’s listing and the sale of Ampere Computing, showed tentative improvement in 2025.
- High entry valuations, elevated financing costs, and investor frustration are forcing firms toward operational fixes and more creative exit strategies heading into 2026.
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In 2025 private equity (PE) firms made modest progress in offloading older, underperforming investments—but the clean-up isn’t over. A glut of unsold portfolio companies, elevated holding periods, and dry powder continue to pose risks heading into 2026. However, there are green shoots in exit activity and IPO interest that could reduce pressure if issuers, valuation environments, and capital markets cooperate.
Key pain points include:
- Exits and inventory: Roughly 12,900 U.S. firms remain unsold in PE portfolios as of late September 2025, slightly higher than a year earlier. Average hold times are near seven years—down from 2023 peaks but still far longer than before the pandemic. This affects liquidity, investor patience, and the ability to raise new funds [1].
- Valuation and financing mismatches: Companies acquired during the boom years are expensive to sell now. With borrowing costs elevated since 2022, many GPs are reluctant to accept lower exit multiples, and performance-based compensation tied to sales or healthy IRRs (
Supporting Notes
- As of September 30, 2025, there were about 12,900 unsold companies in U.S. private-equity portfolios, slightly up from end-2024 [1].
- The average hold period between acquisition and exit is near seven years—lower than its 2023 peak but high relative to pre-pandemic norms [1].
- Dry powder in the U.S. was approximately $880 billion as of September 2025, down from a record $1.3 trillion in December 2024 [1].
- Medline’s IPO in December 2025, which raised roughly $6.3 billion, was the largest IPO in the U.S. since 2021; Ampere Computing sold for $6.5 billion earlier in that year [1].
- Valuation gaps and financing costs are cited as major reasons for holdovers: firms bought during boom valuations are wary of selling at compressed returns; debt financing became costlier post-2022, distancing prices from boom peaks [1].
- Executives are generally more optimistic for 2026: deal activity has picked up, IPO interest (including from SpaceX and Anthropic) is rising, and some believe transaction markets are moving from a “taxi” phase to “takeoff” [1].
Sources
- [1] www.wsj.com (The Wall Street Journal) — Dec 28, 2025
- [2] www.bain.com (Bain & Company) — June 2, 2025