Private equity exits in 2024 have faced significant challenges, with a notable decline in exit values and volumes. The first quarter of 2024 saw a 19% quarter-over-quarter drop in total U.S. private equity exit value. This decline is part of a broader trend of slowing exits since 2022, creating difficulties for PE firms in realizing returns and raising new funds. Several factors have contributed to this exit drought, including high interest rates, limited deal activity, and a substantial pricing gap between buyers and sellers. The median holding period for PE assets sold in H1 2024 was 5.8 years, with 46% of unsold PE-owned assets being held for four years or longer. Geopolitical tensions and U.S. presidential election had also added to the uncertainty.
Despite these challenges, there are signs of potential improvement. Central banks have begun reducing interest rates, which could stimulate deal markets. A stronger IPO market is creating more favorable conditions for exits, and GPs are under pressure to distribute capital to LPs due to aging portfolios, which may drive more exit activity. A significant number of postponed exits from previous years are expected to come to market in 2024 and beyond. Regional variations are also evident, with Continental Europe seeing a 90% quarter-on-quarter rise in exit values, showing some resilience in certain markets. While the overall condition of private equity exists in 2024 remains challenging, there is cautious optimism for improvement as economic conditions stabilize and firms adapt to the new market realities.
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