Exit Readiness and Preparation

• A baseline diagnostic run before the first bolt-on catches platform fragmentation while it is still fixable rather than after it has hardened into the operating model for the rest of the hold
• Sharing revenue or EBITDA figures on an unsolicited acquisition call before an NDA is signed and the buyer's thesis is understood remains the most common first mistake sellers make
• With hold periods now averaging seven years and entry multiples near 11.8x EBITDA, buyers underwrite durability itself, so retention and workflow data need to be visible years before a sale
• Growth that cannot be traced back to a specific operational decision does not survive diligence, since multiple expansion alone no longer carries an equity story
• Revenue concentrated in a handful of clients, especially relationships held personally by the founder, gets discounted heavily in a sale even when the underlying business is strong
• Exit planning that starts two to five years before an intended sale, focused on reducing owner dependence and building predictable revenue, tends to make a business more profitable whether or not it ever sells

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Deal Structures: Buyouts, Bolt-Ons and Sponsor Trades

• UK buyout activity split sharply toward assembly rather than acquisition, with 797 buyouts completed in the first half of 2026, 602 of them add-ons, up 11 percent year on year, while new platform investments fell to just 195
• KPMG's mid-market data tells the same story, with bolt-ons now accounting for 62 percent of deals, up from 56 percent a year earlier
• Management buyout structures typically combine minimal management equity with heavy leverage and private equity backing, though Malaysia's Section 123 restrictions on using a target's own assets to secure acquisition debt show how much local regulation still shapes the model
• A newer independent buyout structure lets an owner borrow against their own company to buy out a private equity partner's stake, avoiding the rolled equity and earn-outs that come with a traditional PE-led deal
• A controlling stake in a leading independent rare-disease pharmacy changed hands from one group of sponsors to another this period, with the seller rolling equity forward rather than exiting fully
• An operator-led buyout of a food distribution business, later merged with a second acquisition into a combined platform, was sold on to a new sponsor within a few years of the original deal

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The Holding Period and Liquidity Backlog

• The private equity backlog now stands at roughly 33,000 unsold companies and $3.8 trillion to $4 trillion in value, a pile Bain estimates will take nine years to clear at current exit rates
• Median hold time for tracked buyout-backed companies rose from 3.2 years in 2020 and 2021 to 4.51 years in 2024 and 2025, while the share of exits clearing at a 3x or better multiple fell from 35 percent to 28 percent
• More than 1,800 US private equity-backed companies have now been held for nine years or longer, and 2025 marked the first year on record that buyout exits traded below the valuations sponsors were carrying them at
• US private equity exits fell to $102.6 billion in the second quarter of 2026, down 46 percent from the prior quarter, while sponsor-to-sponsor sales dropped 57 percent to $24.5 billion, their lowest quarterly count in at least a decade
• A five billion dollar loss on a recent large buyout is being read across the industry as confirmation that returns now depend on EBITDA built during the hold, with 13,325 US portfolio companies still unsold at an eleven-year backlog pace
• Global private equity deployed one trillion dollars in the first half of 2026 across 9,294 deals, even as exits at midyear tracked at 1,315, well below the 3,646 recorded across all of 2025

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Secondaries and Continuation Vehicles

• Sponsors facing a persistent valuation gap between what sellers expect and what buyers will pay are increasingly turning to continuation vehicles, recapitalizations and partial asset sales rather than waiting for a clean exit
• Continuation vehicles rose from 2.7 percent of private equity exit value in 2020 to 8.1 percent today, and manager-led secondaries hit $106 billion last year, a scale that has drawn a formal SEC enforcement inquiry into how those vehicles are valued
• Secondaries fund sizes have grown sharply across the largest platforms, with the latest Ardian secondaries fund reaching $30 billion, larger than the biggest traditional buyout fund raised to date
• A sovereign wealth fund is lining up a $1 billion sale of stakes in several major buyout funds, its second sale of that size in two years, alongside a separate $2 billion private credit divestment earlier this year
• Global secondaries transaction volume hit a record $240 billion in 2025, up nearly 48 percent year on year, with momentum in 2026 giving rise to an emerging tertiary capital layer beyond secondaries themselves

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The Period's Named Mega-Deals

• Silver Lake and Saudi Arabia's Public Investment Fund closed a $55 billion take-private of Electronic Arts, the largest all-cash leveraged buyout on record, with PIF holding 93.4 percent of the combined equity
• Permira sold BioCatch to Visa for $2.4 billion, its fifth full exit of 2026, after revenue nearly tripled and gross profit more than tripled during Permira's ownership
• Advent and Cinven sold TK Elevator to KONE in a deal valued at $34.4 billion, five years after carving the business out of its former parent and building it into the world's largest elevator and escalator company
• Grant Thornton's US arm agreed to acquire CBIZ in an all-cash deal reported at $7.2 billion, becoming the fifth-largest accounting firm in the country and one of the first cases of a public company going private through a PE-backed roll-up
• Brookfield agreed to buy the Aypa Power battery storage platform from Blackstone for roughly $7 billion, taking on the development pipeline and team along with the operating assets, the same month AES shareholders approved a $33.4 billion take-private by GIP, EQT, CalPERS and QIA
• Services-sector deals led the period's larger transactions, including Intertek at a $14 billion enterprise value, InPost at $11 billion, and Apex Services Partners at $10 billion

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AI's New Role in Diligence

• Automated tools are displacing the manual, repetitive rollforward work outside consultants have traditionally billed for, a shift McKinsey's own leadership has reportedly called existential for that line of business
• A seven-agent system built to run modeling, debt sizing, EBITDA normalization and red-flag checks in parallel claims to compress eight weeks of leveraged buyout due diligence into 24 hours
• The share of general partners who call AI a real challenge in exit preparation more than doubled in a year, from 7 percent to 18 percent, as buyers learn to separate embedded workflow change from surface-level tool adoption
• Buyers are beginning to screen out businesses that have not built AI into their operations at all, with realistic exit preparation now running three to five years rather than the twelve months many owners assume
• Fragmented EMR, practice management and ERP systems, not labor costs or interest rates alone, are the quieter reason healthcare PE exits are stalling, and AI only helps once that underlying data foundation is fixed
• Outdated technology infrastructure on its own can cut a portfolio company's exit valuation by 10 to 20 percent, pushing sponsors toward modernized ERP platforms ahead of a sale

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Thanks to Ben Banks, Jeremy A. Johnson, Andy Knox, Vinay Raman, Alexis Sikorsky, Darryl Bates-Brownsword, Gavin Gibbons, Chan Weng Fai, Darren Gleeman, Bryann Cabral, Torge Barkholtz, Michael Hutto, Kevin Dowd, Peter Denious, Rex Reinhardt, Scott Engler, Gavin Geminder, Stacy Kirshner, Sohail Jooma, Philip De Vusser, Dr Rob Hendriks, Mohith Sondhi, Tristan Morris, Chris Buchanan, Steffen Pauls, Archie Sampson, Joe Hetherington, Sid Jain, Michael Luu, Remo Duzkale, Evan S., Derek C., Matt Mettry and Wolfe Tone for contributing insights to this edition. Find the full list of posts and voices on LinkedIn: