Private Equity exit market thaws as IPOs regain favor
Since the start of the meltdown, the exit market has been slowly thawing for private equity investors, with each quarter in 2009 being better than the one before.
The fourth quarter is on track to continue the trend with 42 completed exits so far, according to the PitchBook Platform.
With IPOs again becoming a viable exit method, the number of IPOs has steadily grown while the sales to strategic acquirers has steadily declined.
One possible explanation, according to PitchBook, is that IPOs give PE firms the ability to raise capital for their indebted portfolio companies and return some cash to investors but also enable them to remain majority owners with a stake that they can cash in at a later date and a higher multiple when the economy picks up.
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