The Changing Exit Environment and Its Impact on Private Markets (HSBC Innovation Banking)

Summary

• UK private capital markets face a structural liquidity gap, with PE sponsors deploying capital at a 2.1x deployment-to-exit ratio between 2021 and 2025.p.3
• Median UK PE portfolio holding periods lengthened to 3.9 years, compared to 3.2 years in 2020.p.3
• The public listing route compressed significantly, with IPOs falling from 22.9% of UK PE exit value in 2021 to 3.9% in 2025.p.3
• Across a sample of 200 UK-domiciled funds from 2020 to 2026 vintages, aggregate median PE DPI multiple compressed to 0.03x.p.5
• UK PE dry powder reached $196 billion as of Q3 2025, representing a 12.5% increase from 2024.p.10
• Global GP-led secondary transaction volume reached $96.2 billion across 154 transactions in 2025, up 52% and 25% YoY respectively.p.15

Key insights

1. Private markets face a structural liquidity deficit driven by slower cash distribution rather than underlying portfolio asset quality.p.3
2. UK VC exits via public listings collapsed from 61.8% of total exit value in 2021 to 1.4% in 2025.p.6
3. Corporate buyers generated the majority of UK PE exits from 2022 to 2025, accounting for 53.3% to 57.1% of transactions.p.7
4. Median M&A EBITDA multiples for buyouts stood at 15.2x in 2025 and 12.6x through early June 2026.p.8
5. Experienced private equity firms captured over 88% of all UK PE funds raised YTD in 2026.p.10
6. Total UK PE dry powder contracted by 20.4% from 2024 levels, concentrating capital in fewer hands.p.10
7. UK PE capital raising dropped 35.3% in 2025 as LPs prioritized managers demonstrating actual cash returns.p.11
8. NAV financing deal size per lender grew by more than 140% between 2023 and 2024, rising to €830 million in 2025.p.14