Download PitchBook’s Report here.
PitchBook’s latest US PE Middle Market Report shows a big drop-off in middle-market exit activity. Only 175 exits were completed in the first quarter, many of which probably started in late 2021. That’s a low number even by pre-COVID standards. When you take out the second and third quarters of 2020, Q1 2022 represents the lightest exit flow since early 2016.
Part of that is deliberate, as sell-side holders prioritized exits last year. Over 1,100 exits were done in 2021; the previous high mark was 900 in 2018. The median holding time for middle-market companies dropped from 5.4 years to 5.0 years, suggesting that even aging portfolio companies were offloaded in large quantities. The sharp drop-off isn’t too surprising, but it also confirms a slower trickle, or at least a normalizing, of exits going forward. It was good timing, in hindsight, as softening share prices are spooking the IPO market and spurring some hesitation in the M&A market. It also means fewer distributions back to LPs after their managers inundated them with returns over the past five quarters.
(Past performance is no guarantee of future results.)
Private Credit Defaults 101: Back to School
As Labor Day approaches, the unofficial end of summer is upon us. But, before we get too sad, there is also the familiar back-to-school energy.