PE Buyout Multiples Hit Record 11.8x
Private equity entry multiples have reached a new record, averaging 11.8x EBITDA, according to a 2026 outlook. With less leverage available, firms are under intense pressure to find operational value, especially as over half of portfolio companies have now been held for four or more years amid a slow exit market.
The current 11.8x EBITDA multiple slightly surpasses the previous peak in 2022 and is significantly higher than the 9.1x average from 2010 to 2022. This surge is partly due to an increase in larger deals, which naturally command higher multiples; deals over $500 million averaged a 15.8x multiple over the last five years. Despite record valuations, private equity still often trades at a discount to public markets, with US buyouts averaging a 29% lower EBITDA multiple than the S&P 500 over the past 27 years. A key factor is the reduced availability and higher cost of debt. Debt now accounts for just 37% of entry multiples, a significant drop from the 2010-2022 average of 44%. With rising interest rates, the cost of servicing debt has increased, compelling firms to inject more equity into deals and shift focus away from financial leverage as a primary return driver. This environment has extended holding periods for portfolio companies to a median of 6.0 years. A record 16,000 companies have been held for four years or more, representing 52% of all buyout-backed inventory. This backlog is a result of a sluggish exit market in recent years, though exit values did see a rebound in 2024 and 2025, largely driven by a resurgent IPO market for large assets. Consequently, the pressure to generate returns through operational improvements has intensified. Firms are now heavily focused on strategies like revenue growth, margin enhancement, and strategic add-on acquisitions to create value. This "buy-and-build" strategy, in particular, has been shown to outperform standalone deals.
