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Bain pegs average buyout hold at seven years

TPG Twin Brook's Betsy Booth expects holds to stay above the three-to-five-year model lenders underwrote.

At a glance

  1. Booth does not expect the seven-year hold to become the standard, because the conditions that produced fast exits have not returned.
  2. For lenders, the change is duration: a loan sized on a three-to-five-year exit assumption now sits against a company that may not be sold for closer to seven years.
  3. Booth traced the extension to the 2010–2021 period, when sponsors relied on multiple expansion, low borrowing costs and an active M&A market.

Average buyout hold periods have extended to roughly seven years, according to Bain data that TPG Twin Brook partner Betsy Booth cited on a Middle Market Growth podcast published Oct. 23.

Booth does not expect the seven-year hold to become the standard, because the conditions that produced fast exits have not returned. She expects hold periods to stay above the three-to-five-year model that sponsors and lenders grew used to.

For lenders, the change is duration: a loan sized on a three-to-five-year exit assumption now sits against a company that may not be sold for closer to seven years. That lengthens the stretch in which repayment depends on the borrower's operating performance rather than a sale.

Booth traced the extension to the 2010–2021 period, when sponsors relied on multiple expansion, low borrowing costs and an active M&A market. With rates higher for longer, seller expectations elevated and buyers more selective, she said an attractive exit price now usually requires more EBITDA growth and less multiple arbitrage.

Time already spent is the second input. Booth said many sponsors believe their post-COVID companies lost one, two or even three years depending on the industry, which pushes an exit back without any change in the underlying credit.

Booth frames the shift as maturity rather than a cycle. Private equity is larger, assets are more expensive and the value creation behind a return has become more operationally intensive, she said; even if exit activity accelerates, sponsors will be more flexible about timing than they were a decade ago.

That matches the posture Twin Brook's executives have argued publicly for underwriting discipline and active portfolio management as differentiators among direct lenders, a case this publication covered in August. The Oct. 23 episode was presented by TPG Twin Brook.

That lengthens the stretch in which repayment depends on the borrower's operating performance rather than a sale.

Reported by the Direct Lending desk from Middle Market Growth and Bain (cited on the podcast). Published . Corrections

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