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May 19, 2015 at 12:34 PM
The average time private equity firms hold buyout investments has dropped to 5.5 years for companies sold so far in 2015, according to a report last week by Preqin, the alternatives data provider.
This is the first decline in the average holding period for buyout deals since the financial crisis. In 2014, the average holding period peaked at 5.9 years for companies exited.
The drop is coupled with a record number and total value of private equity-backed exits in 2014, Preqin reported.
Last year, 1,686 exits valued at a total of $442 billion took place, indicating that general partners were still capitalizing on suitable exit opportunities for their investments.
Preqin said this positive trend could be attributed in part to the increasing prominence of partial exits in recent years.
Partial exits accounted for 33% of all exits in 2014, compared with just 21% of all private-equity-backed exits in 2006 and 19% in 2008.
“Private equity investments are traditionally long-term investments with typical holding periods ranging between three and five years,” Christopher Elvin, Preqin’s head of private equity products, said in a statement.
“The average holding period for these deals has in fact been rising steadily ever since the financial crisis, and reached almost six years on average for deals exited in 2014.”
