Private equity had a better year for exits in 2025, but the recovery was uneven. Allianz Research put global sponsor exit value at around $905bn for the year, yet roughly three quarters of that came from a small number of very large deals. The middle market, where most portfolio companies sit, remained consistent.

The backlog underneath is large and ageing. The 2026 Bain private equity report found that more than 16,000 companies have now been held for longer than four years, over half of all buyout backed inventory, with more than $3tn of unrealised value waiting to be returned to investors. Holding periods have stretched well beyond the typical plan, and the pressure to generate distributions is building.

Sponsors have turned to the secondaries market to manage this. PitchBook reports that secondaries set a record of around $226bn in 2025, up more than 40% on the prior year, with continuation funds now accounting for roughly one in five sponsor backed exits. These are no longer a last resort. They have become a standard way to return capital when a clean sale or a listing is not available.

For owners who sold to private equity in 2020 or 2021, this means longer holds and a greater chance of being moved into a continuation vehicle rather than sold outright. For trade buyers and acquirers, it points to a deep and growing pipeline of middle market assets held by sponsors who increasingly need to make transactions.

The indication that interest rates may rise makes timing harder, since the easy exit window many funds were waiting for now looks less certain. We expect this to bring more middle market assets to market driven by fund pressure rather than market strength, shaping deal flow through the second half of 2026 and into 2027.

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