Private Equity Exit Readiness Study (EY)

Summary

• Private equity firms manage 32,000 portfolio companies worldwide, facing challenging externalities that make valuation and exit routes less predictable.p.1
• Strategic acquirers purchased nearly US$500b in trade sales in 2025, an increase of 70% by value, while continuation vehicles unlocked over US$100b in liquidity.p.2
• Annual distributions to limited partners have dropped from 20–25% of NAV to roughly 15%, leaving 35% of global portfolio companies held for over six years.p.2
• Starting exit preparation 12–24 months before sale yields the best results, with 86% of GPs stating that preparation improved their exit valuations.p.3
• Data readiness challenges in finance functions have improved, with GPs citing KPI and data gaps as their main issue dropping from 72% last year to 60%.p.4
• Sponsor and management alignment is strong, with 82% of GPs and 70% of management teams aligned on timing, valuation, and exit routes.p.5
• AI concerns are rising rapidly in deal preparations, with 18% of GPs and 17% of management teams citing AI disruption and strategy as a key challenge.p.7

Key insights

1. Initiating exit readiness 12–24 months prior to sale yields the strongest valuation improvements compared to starting under six months prior.p.3
2. Evidencing value creation initiatives in exit EBITDA remains the most impactful factor on exit outcomes as well as the top challenge for PE firms.p.4
3. Reduced distribution rates of approximately 15% of net asset value have resulted in 35% of PE portfolio assets being held longer than six years.p.2
4. Portfolio company management teams rank better preparation of the management team as their top priority to change in future sale processes.p.5
5. Limited partners are increasingly prioritizing time-to-liquidity and clear exit optionality over pure return metrics.p.6
6. The percentage of GPs reporting AI as a major exit preparation challenge grew by 2.4x year-over-year.p.7
7. AI and technology solutions are reducing manual data aggregation tasks, allowing teams to link operational insights directly to equity stories.p.4