2025 Exit Surge in Private Equity: Trends, Challenges & What 2026 Holds

Throughout 2025, the private equity (PE) industry has made incremental progress in reducing its exit backlog, but the macro and asset level headwinds that led to a buildup of unsold portfolio companies persist. As of September 30, 2025, approximately 12,900 U.S. companies remained in PE portfolios, and average holding periods approached seven years—still substantially longer than in the pre-pandemic era [1]. These elevated hold times, exacerbated by inflated purchase valuations and increasing borrowing costs, are delaying value realization and LP distributions.

The capital environment is mixed. While the amount of undeployed PE capital has dropped from its December 2024 peak of $1.3 trillion to $880 billion by September 2025, liquidity remains under pressure. LPs have become more demanding, not simply seeking exits but full exits with meaningful returns. In this context, structures like continuation vehicles, secondary market sales, and IPOs are resurfacing as prominent tools to unstick frozen assets [4][11].

Exit conditions improved in 2025, especially for high-profile companies and IPOs. The Medline IPO—its biggest since 2021—and Ampere Computing’s $6.5 billion sale to SoftBank are emblematic of what many expect to be a broader uptick in successful exits moving into 2026 [1]. Yet this rebound is uneven. The valuation expectations baked into many boom-era deals remain difficult to satisfy under current interest rate regimes. These gaps discourage sellers from liquidating at losses, further constraining liquidity even as deal value rises [1][4].

Strategically, the PE industry in 2026 faces a juncture: those with operational discipline, diversified sector exposure (tech, industrials, hard assets), and creative liquidity strategies are positioned to lead, while smaller or less differentiated firms will face growing fundraising and value-realization challenges [4][11]. Key open questions include: when will interest rates decline enough to close valuation gaps; how quickly will IPO pipelines mature; and whether regulatory scrutiny (ESG, fee transparency) will reshape exit timing and reporting standards.