US private equity firms are on track to deliver a second year of rising exit activity, signalling a gradual recovery in a market still working through a growing backlog of ageing portfolio companies, according to a new PitchBook report.

Buyout firms completed 1,300 exits through October, raising an estimated $621.7bn. That compares with 1,369 exits worth $379.6bn recorded across all of 2024. Exit activity accelerated during the third quarter to levels last seen in late 2021 and early 2022, PitchBook analyst Kyle Walters told Reuters.

Half of surveyed fund managers cited exits as their top priority this year. Only 8% plan to delay sales until market conditions improve, reflecting growing pressure to return capital to LPs. Yet the median hold period keeps rising, reaching 3.9 years versus three years in 2022, with nearly 30% of private equity-backed assets now held for seven years or longer.

Fundraising continues to tighten, limiting firms’ ability to recycle capital into new deals. The 10 largest managers captured 46% of all commitments raised by October, up from 35% in 2024. Lower distributions leave LPs with less capital for new vintages, further slowing sponsor-to-sponsor deal flow. Walters said the private equity flywheel is turning again but not yet at full speed.

First-time managers face the steepest challenges. PitchBook expects 2025 to set a new record low for capital raised by debut funds, extending a difficult fundraising environment that has constrained new entrants.

The industry’s gradual recovery will depend on sustained exit momentum and improved capital formation to reduce the growing stock of older assets sitting on private equity balance sheets.

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