Portfolio company minority stake sales rise as liquidity pressure intensifies

Pressure on private equity funds to return profits to investors helped fuel a spike in the value of minority stake transactions targeting portfolio companies.

The value of minority stake transactions targeting private equity- and venture capital-backed companies jumped nearly 67% to $51.82 billion globally in 2025 from $31.08 billion in 2024, according to S&P Global Market Intelligence data. The increase significantly outpaced the 18% rise in value for all exits between 2024 and 2025.

In some of those minority stake transactions, private equity fund managers elected to sell a stake in a portfolio company when a full exit was not possible or desirable because of market conditions, said Ken Barry, a London-based partner and head of European private equity for law firm White & Case LLP. The deals allow a private equity fund to offload some of the investment risk to another investor while also delivering cash to its limited partners — a critical need at a time when low ratios of distributions to paid-in capital (DPI) are hampering private equity fundraising.

"The desire to de-risk, the desire to take some cash off of the table, the desire to deliver some DPI back to investors — all of that has come together to make for a perfect market for these sorts of deals," Barry said.

'Significant liquidity'

Minority stake sale of private equity-owned businesses hit a recent peak in the summer of 2025. Global aggregate transaction values exceeded $10 billion in both July and August, according to Market Intelligence data.

Among the deals from that period was Apollo Global Management Inc.'s $662.3 million acquisition of a minority stake in UK fueling station operator Motor Fuel Limited from Clayton Dubilier & Rice LLC. CD&R's statement on the deal highlighted the "significant liquidity to investors" resulting from the sale, even as it retained control of Motor Fuel Limited.

Intensifying pressure

The pressure on private equity fund managers to generate liquidity for LPs and improve DPI has only intensified after four years of record low distributions. Buyout fund distributions as a percentage of net asset value averaged 25% between 2010 and 2021 but have been stuck below 15% in the years since, ranging from 11.8% to 14.6% in the 2022-2025 period, according to Bain & Co. research.

Twenty percent of middle-market private equity fund managers recently surveyed by law firm Winston Taylor said they have used minority stake sales to generate cash for LPs within the last two years. Sixteen percent of managers ranked it their most important liquidity strategy.

Still, a minority stake sale is just one choice on a menu of options for fund managers seeking to generate liquidity for LPs while retaining control of an asset. In that same Winston Taylor survey, 58% of fund manager respondents said they have used continuation vehicles to generate cash for LPs — a process that involves shifting a portfolio company from a fund to the continuation vehicle, triggering an opportunity for old investors to get out and new investors to get in.

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But the process is more complicated and may have a higher potential for damaging LP relationships, said Steve Siesser, chair of law firm Lowenstein Sandler's private equity practice.

"A minority stake deal is an easier deal to get done than setting up a whole new [continuation vehicle]," Siesser said.

Outlook

An additional benefit to the minority stake sale is that the transaction sets a mark on the portfolio company's value, said Daniel Kozin, a White & Case partner based in New York. A strong mark could serve to reassure fund investors that a full exit will be profitable, even if they have to wait.

"It’s a very clear data point on the economics of the deal,” Kozin said.

Barry said the recent growth in minority stake transactions targeting private equity portfolio companies likely reflects managers' growing comfort with the deals. As years of slow exit activity have swelled private equity portfolios with long-held investments, more firms have been on both sides of minority stake deals.

"They know that the lead sponsor is probably going to want to exit on a similar time horizon, and I think a lot of them have got comfortable with that because they have rolled over a lot of transactions themselves," he said.