Private Equity Portfolio Company Holding Periods – Updated
I periodically update the private equity portfolio company holding periods study to track this trend over time. In March, I reported a slight downward trend in portfolio company holding durations.
With the addition of five more months of 2018 exits (through mid-August 2018), the holding period continues to decline, but now more pronounced. For 2018 exits, the holding periods declined from 4.9 years (Jan. – Mar. 2018 exits only) to 4.8 years (2018 YTD).
Current = 4.8 years, (2018 YTD)
Peak = 5.6 years, (2014 – recovering from the recession)
Low = 3.0 years, (early 2000’s dot com boom… although it went down to 3.5 years in 2008 as well)
When the economy is doing well and corporate valuations are on the rise, private equity firms tend to realize a good return in equity much quicker and therefore hold portfolio companies for shorter durations.