Exits have neared record highs in 2025 and 2026 by dollar volume and deal count, according to Mergermarket data. Excluding the cheap-capital frenzy of 2021, last year’s exit count of 962 was the best North America has seen, as was its deal volume of USD 504.5bn. Year-to-date 2026 exits have totaled 853, on pace to finish above 1,000.

Source: Mergermarket, data correct as at 02 Nov 2026

But if the exit aperture has expanded, it may not be wide enough, as buyout count leapt in 2021 and has not returned to historic levels. Meanwhile, exit activity hasn’t strayed as far from the past decade’s high-water marks.

Source: Mergermarket, data correct as at 02 Nov 2026

A longer road 

Many other data points suggest a long road to distribution for early-decade vintage funds, particularly for assets below the top tier. Industry estimates have shown that current portfolios could take nine years to clear out. A Bain & Co. report showed distributions-to-paid-in capital (DPI) ratios for the 2020 and 2021 cohort entered the year far below historical norms, signifying a lack of actual cash returned to limited partners.

And yearslong macro headwinds have yet to cease, with interest rates on the rise yet again, exacerbating financing costs. Highly leveraged companies are facing a daunting maturity deadline. Creditors have taken the keys of multiple companies in the healthcare space.

Furthermore, a crowded middle market is keeping buyout valuations elevated, and artificial intelligence has dampened the prospects of many software portcos.

Mergermarket data shows the average hold period at exit is now 6.25 years, more than two years longer than in 2020.

More timing challenge than crisis

Yet deal flow persists. One M&A attorney noted sponsor activity over the past few months has been the highest in years on both the sellside and the buyside.

While the backlog of assets should lead to more activity, the attorney expects the process to be more gradual, as sponsors use liquidity tools to avoid rushing assets to market. “If the businesses are strong, everyone is willing to work to see the exit through.”

Assets that need more work, either through operational efficiencies or scaling with more add-ons, have avenues to do so instead of being forced to sell due to fund dynamics, the attorney added.

“I think it’s more of a timing challenge than a crisis,” the attorney said.

And not all corners of the market are feeling the squeeze. Andrew Mathias, a managing director at KPMG, noted several recent examples in the insurance sector where exit timelines have accelerated, including one current private equity-held company where the initial seven-year expectation has been reduced to about three.

“Private equity [firms] are not running the same typical playbook in insurance that they were running with other strategies,” he said. “It’s more opportunistic.”

And for assets in longer-than-expected hold periods, secondary transactions and continuation vehicles have relieved some of the liquidity pressure.

Additional seasoning required 

Sponsors at the Mergermarket Private Equity Forum US in Austin last month noted that other alternative liquidity strategies have so far proven effective.

Paceline Equity Partners, for example, invests in a variety of asset classes, notably corporate debt and real assets, alongside its PE holdings where it targets overlooked or mispriced companies. It has achieved high DPI ratios through managing its shorter-duration investments and leveraging liquidity options before a full exit, said Leigh Sansone, a co-founder of the firm.

In one case, Paceline initiated a sale process for one of its portfolio companies in its fourth year of ownership, in line with its original timeline, but buyers wanted “a little more seasoning in it,” Sansone said. The sponsor instead executed a dividend recap, taking advantage of leeway provided by recently paid-down debt. It later returned to market and sold at a higher valuation than projected.

“Even with the extension, we were able to get good interim cash flows back with the dividend recap … and then ultimately sell it for more,” she said.

Sansone noted that strenuous risk modeling from the outset underpins the sponsor’s ability to generate returns.

“The only thing you can count on is volatility in this environment,” Sansone said. “So we specifically do not underwrite the macro, period. We’re going to keep a recession in our base case, regardless if the recession happens or not.”