Key Takeaways
- • Private equity buyouts reached average holding periods of 7.1 years in 2025, the longest duration since 2000, up significantly from the 5-6 year average during 2010-2021, driven by valuation mismatches and elevated borrowing costs.
- • Telecom and media assets recorded the longest average holding period at 7.27 years, followed by energy and utilities at 6.96 years, reflecting sector-specific challenges in achieving target valuations.
- • Rising interest rates have constrained PE firms' ability to finance growth through cheap debt and reduced buyer demand, forcing managers to pursue alternative value creation strategies including add-on acquisitions, organic growth, and noncore divestitures.
- • Global private equity and venture capital entry values increased 20% to $468.51 billion in 2025 from $390.08 billion in 2024, with average buyout fund size reaching $2.1 billion, yet exits remain delayed as fund managers await anticipated Federal Reserve rate cuts.
- • Valuation expectations between buyers and sellers remain misaligned, with many PE firms having acquired assets during the 2019-2021 low-rate environment now holding for market improvement rather than executing exits at current multiples.
Summary
Private equity buyouts are being held significantly longer in 2025 as fund managers confront a challenging exit environment marked by valuation gaps and elevated financing costs. According to S&P Global Market Intelligence analysis using Preqin Pro data, average holding periods have extended to 7.1 years—the longest stretch since 2000—compared with historical norms of 5-6 years during the 2010-2021 period. This represents a material shift in PE portfolio management strategy, with holding periods expected to peak in the back half of 2025 around the 6.0-year mark.
The extension reflects a fundamental mismatch between buyer and seller expectations. Anthony Arnold, private equity co-chair at Barnes & Thornburg LLP, attributes the prolonged holds to elevated valuations that have not materialized as anticipated. Rather than accept lower exit multiples, PE firms are pursuing alternative value creation strategies: add-on acquisitions, organic business growth acceleration, and divestiture of noncore operations. These tactics aim to boost portfolio company cash flows and valuations before eventual exit. Christopher Atkinson, co-chair for M&A and private equity at Katten Muchin Rosenman LLP, highlighted the core issue: "People were buying in 2019 to 2021 when interest rates were very different than where they are today. What we're seeing are firms that are continuing to hold these assets and waiting for market improvement."
Interest rate dynamics are the primary driver of extended holding periods. Higher borrowing costs have constrained PE firms' traditional growth-through-leverage playbook, reduced overall M&A demand, and pressured portfolio company cash flows as debt service costs rise. Steven Zaorski, partner at Ropes & Gray LLP's asset management group, notes that market participants are adopting a "wait-and-see" posture around anticipated Federal Reserve rate cuts. Buyers and sellers alike are delaying transactions in expectation of a lower-rate environment, creating a temporal arbitrage where holding assets longer appears preferable to transacting today.
Sector performance reveals concentrated holding period pressures. Telecom and media assets lead with 7.27-year average holding periods, while energy and utilities follow at 6.96 years, suggesting these sectors face particular valuation headwinds. Rising global trade tensions compound the uncertainty, further incentivizing fund managers to extend hold periods rather than execute exits into volatile markets.
Despite these headwinds, PE activity has rebounded. Global private equity and venture capital entry values increased 20% to $468.51 billion in 2025 from $390.08 billion in 2024, and average buyout fund size reached $2.1 billion, approximately 7% larger than 2024. Add-on acquisitions represented 72.9% of all buyouts in 2025, consistent with the five-year average, reflecting PE's reliance on bolt-on strategies to drive portfolio value creation amid constrained exit conditions.
The extension reflects a fundamental mismatch between buyer and seller expectations. Anthony Arnold, private equity co-chair at Barnes & Thornburg LLP, attributes the prolonged holds to elevated valuations that have not materialized as anticipated. Rather than accept lower exit multiples, PE firms are pursuing alternative value creation strategies: add-on acquisitions, organic business growth acceleration, and divestiture of noncore operations. These tactics aim to boost portfolio company cash flows and valuations before eventual exit. Christopher Atkinson, co-chair for M&A and private equity at Katten Muchin Rosenman LLP, highlighted the core issue: "People were buying in 2019 to 2021 when interest rates were very different than where they are today. What we're seeing are firms that are continuing to hold these assets and waiting for market improvement."
Interest rate dynamics are the primary driver of extended holding periods. Higher borrowing costs have constrained PE firms' traditional growth-through-leverage playbook, reduced overall M&A demand, and pressured portfolio company cash flows as debt service costs rise. Steven Zaorski, partner at Ropes & Gray LLP's asset management group, notes that market participants are adopting a "wait-and-see" posture around anticipated Federal Reserve rate cuts. Buyers and sellers alike are delaying transactions in expectation of a lower-rate environment, creating a temporal arbitrage where holding assets longer appears preferable to transacting today.
Sector performance reveals concentrated holding period pressures. Telecom and media assets lead with 7.27-year average holding periods, while energy and utilities follow at 6.96 years, suggesting these sectors face particular valuation headwinds. Rising global trade tensions compound the uncertainty, further incentivizing fund managers to extend hold periods rather than execute exits into volatile markets.
Despite these headwinds, PE activity has rebounded. Global private equity and venture capital entry values increased 20% to $468.51 billion in 2025 from $390.08 billion in 2024, and average buyout fund size reached $2.1 billion, approximately 7% larger than 2024. Add-on acquisitions represented 72.9% of all buyouts in 2025, consistent with the five-year average, reflecting PE's reliance on bolt-on strategies to drive portfolio value creation amid constrained exit conditions.
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