Private Equity Portfolio Aging
Portfolio company aging stats are dictated by past acquisition activity and exit rates over time.
As portfolio companies grow older in their respective funds, they age out, via an exit, often within 3 – 7 years. Portfolio companies in the 5 – 7 year vintage signal potential near-term transactions – deal flow – the lifeblood of investment banks, private equity firms, accountants, law firms, and a host of M&A service providers.
For U.S. portfolio companies owned by U.S.-based private equity firms, there are currently:
- 1,225 portfolio companies currently aged (5 – 5.9 years)
- 997 portfolio companies currently aged (6 – 6.9 years)
- 776 portfolio companies currently aged (7 – 7.9 years)
As we previously reported, the median holding period for private equity portfolio companies industry wide is currently 4.9 years. Consequently, let’s look into the 5-year aging mark in more detail.
If we stand on the 5-year mark and look upstream at the parade of portfolio companies approaching their five-year anniversary in their respective funds, we’ll see the monthly aging flow shown in the graph below.
Interpretation – 97 portfolio company cross the 5-year mark in January 2022. 100 more in February. 188 more in March… and so on.
On average, 150 portfolio companies will cross their 5-year anniversary within their respective funds each month in 2022.
(Note: this study only includes U.S. portfolio companies owned by U.S.-based PE firms.)
Want to get ahead of the deal flow? Contact us to discuss a data feed of aging portfolio companies.