A McKinsey & Company blog post in mid-March on “Beating the odds: How private equity firms can improve exit prospects”, bears out some of the conclusions in the firm’s 2026 global private markets report.
According to McKinsey, there is a backlog of some 16,000 companies globally held by private equity investors for longer than four years, but that are in principle ready to exit. This figure is just over half the entire inventory of buyout-backed companies in 2025, and 10% higher than the preceding five-year average.
Furthermore, the total exit count was down 15% year-on-year in 2025, and the average holding period for private equity-held companies rose to a historic high of 6.6 years.
A 41% increase on the 2024 total exit value last year shows the importance of fewer and bigger deals, but brought little relief for the industry as a whole.
McKinsey says there are seven techniques to improve the odds. These are: embed exit plans into the acquisition; establish rigorous exit governance and planning; map the potential buyers; develop a value-creation plan allowing for future buyers; launch “value capture sprints” just before exit; highlight artificial intelligence readiness; and tap third party advisers.
Some of those have long been listed as private equity best practice anyway. If private equity firms need reminding, then it’s no wonder that the Financial Times recently published a report headlined “Private capital’s great disappointment era begins”.
It quotes figures from Robert A. Stanger & Co. that redemption requests on untraded business development companies – popular vehicles for high-net-worth investors in private markets – were running at just under US$6 billion as of early March 2026, up from almost nothing before 2022. Add in redemption requests that are still unmet, and the total is almost $8 billion.
Concurrently, the US Department of Labor, fulfilling a longstanding commitment by President Donald Trump, has issued draft rules for consultation on opening up the 401(k) retirement plans to private capital investments. That roughly $10 trillion pool could provide valuable capital for private markets managers experiencing redemptions and further pullback from their traditional investors.
The rules offer 401(k) fiduciaries more robust safe harbour protection against liabilities stemming from investments in private assets. Other alternatives, such as cryptocurrencies and commodities, will also potentially be covered.
This proposition is controversial even within the Trump administration. Scott Bessent, the treasury secretary, has stated publicly that he does not want “something rotten” offered to 401(k) plans. It’s understandable, given private markets’ current performance. One can also see why private equity might be in a hurry to improve results.
