Private Equity Firms Drift From Catch to Release
Holding periods before selling companies are shrinking. Is that a commentary on the economy?
The economy could be a little fishy.
Photographer: Ben Stanstall/AFP/Getty Images
Private equity firms appear to be signaling “Last one out is a rotten egg.” If those powerhouse investment firms smell something fishy, other investors should take notice.
Holding periods — the amount of time between when a buyout firm makes an acquisition until it flips the company back into the public markets or to another buyer — have been drifting down for the past few years around the world. Last year, though, they took a dive, including in the U.S., where they had risen slightly in 2017. In 2018, it was just 4.5 years from buyout to exit in the U.S., according to research firm Preqin. That’s down from an average of 5.1 years in 2017 and the quickest turnaround time the PE market has seen since 2009.