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The Buyout Bubble’s Exit Bottleneck: Preqin

by

May 16, 2013

Fund managers are struggling to realize investments made in the Buyout Boom, according to Preqin.  They are finding the exit but it takes longer than it used to.

 

The average holding for PE portfolio companies that were sold in 2012 reached five years, years, compared to 3.9 years in 2008. Megadeals (over USD 1bn) exited so far in 2013 had an average holding period of 6.2 years, up from just 2.1 years in 2008.

Other findings

  • A significant 63% of portfolio companies purchased in 2006 and 73% purchased in 2007 have yet to be sold, as fund managers have struggled to exit companies purchased during the buyout boom.
  • The average holding period for deals exited so far in 2013 has dropped slightly to 4.9 years.
  • European portfolio companies have the longest average holding period at 5.2 years for deals exited so far in 2013, compared to 4.8 years for North American portfolio companies.
  • The aggregate value of exits dropped to just $5.2bn in Q1 2009, but has been on an upward trend since, reaching a high of $126bn in Q2 2011.
  • Investors continue to favor buyout funds. 51% of LPs looking to make new commitments in 2013 plan to target small to mid-market buyout funds and 23% expect to commit to large or mega buyout vehicles.
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