Private equity buyouts record longer holding periods in 2025

Private equity and venture capital buyouts posted longer holding periods across most industries in December compared with 2020, according to an analysis by S&P Global Market Intelligence using Preqin Pro data.

Private equity firms are holding portfolio companies longer as valuations have not increased as expected, said Anthony Arnold, private equity co-chair at Barnes & Thornburg LLP. To increase valuations, firms pursue add-on acquisitions, grow the business organically, and divest noncore operations, extending the holding period.

"The interest rates have a lot to do with it. You can't borrow as cheaply to fuel the growth, but it also reduces the demand. Cash flows are hurt a little bit when people are having to spend more money on interest rates," Arnold said.

"What we're seeing still is a valuation mismatch between buyers and sellers," said Christopher Atkins, co-chair for M&A and private equity at Katten Muchin Rosenman LLP. "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."

Rising global trade tensions and expectations of further interest rate cuts by the Federal Reserve have also prompted fund managers to hold portfolio companies longer, said Steven Zaorski, partner at Ropes & Gray LLP's asset management group.

"Our clients … and the buyers of these companies obviously want a lower interest rate environment. As long as it's dangled out there that [the Fed is] going to cut another quarter next quarter or … in a half a year, that would lead to this dynamic where no one wants to do it now and hold on for a few more months," Zaorski said.

– Read about global private equity investments in Japan. – Read about private equity and venture capital-backed rounds of funding in November. – Explore more private equity coverage.

More exit activity expected in 2026

Private equity exits are expected to increase in 2026 as the Federal Reserve loosens monetary policy and valuations normalize, Zaorski said.

Firms also need to return capital to limited partners via distributions. "There is a need to generate returns for their investors. If they've been holding assets for seven or eight years, there's not much longer that they can go," Arnold said.

Longest holding periods

The telecom and media sector recorded the longest average holding period at 7.27 years. The energy and utilities sector followed at 6.96 years, and the industrials sector at 6.34 years.

"We're going back to the interest rates. Those [sectors have] typically large companies that are going to require larger financing to get it over the line. That's hard to come by," Zaorski said.

The consumer discretionary sector had an average holding period of 6.28 years as of December, down from 6.55 years in 2024 but up from 6.07 years in 2020.

"A lot of those companies rely on goods and services produced in other countries, usually countries where things can be made cheaper. Rather than go out with uncertainty, particularly with things like the cost of goods and services, they'll hold on to it and wait for the economy to level off," said Warren Goodworth, partner with Ropes & Gray's asset management group.