Private Equity, IPO Dreams Hit A Wall: 58% Of Companies Are Rethinking Exit Timelines

Most private companies need about two years before they’re ready for a sale or initial public offering.

That’s according to a new KPMG survey, which found that 53% of private company executives say their businesses could achieve an attractive valuation within the next 24 months. Just 43% said their companies are prepared to execute a transaction today.

The disconnect comes as private companies rethink their exit strategies. Some 58% of respondents said the expected timing of their most likely liquidity event had changed over the past year, highlighting how difficult it has become to plan around an uncertain transaction environment.

“Private-market exit success was once about finding the right window. Today, it’s about being prepared when one opens,” Erika Whitmore, KPMG’s Private Emerging Growth Audit and Assurance Leader, wrote in the report.

Private Equity And IPO Exits Face A Readiness Test

Strategic sales remain the most popular potential exit route, with 43% of companies considering a sale to another business. Another 34% are considering selling to a private equity investor, while 16% are weighing a traditional initial public offering.

But having options and being able to execute them are two different things.

Only 21% of companies said they were preparing for multiple exit pathways, while another 21% had one preferred route and a defined contingency plan. Less than half (48%) were confident they could switch to another exit strategy without significant delays, additional costs or valuation losses.

The consequences are already showing up in deals. KPMG found that 26% of private companies had experienced a liquidity process delayed, materially restructured or canceled over the past five years because of an unexpected readiness gap.

Among companies affected, 22% reported lower valuations or reduced proceeds, while 17% faced longer holding periods and 13% incurred higher transaction advisory costs.

“There are a lot of companies sitting on the sidelines waiting for the perfect market window, but volatility isn’t going away,” said Shari Mager, KPMG’s Private Emerging Growth Advisory Leader.

Cybersecurity, Technical Debt Are Deal Breakers

KPMG found:

• 44% of companies reported moderate or extensive technical debt in their finance and reporting environments.
• One-third of respondents said technical debt had been raised as a concern during due diligence or valuation discussions
• 37% faced heavy cybersecurity scrutiny during liquidity discussions.
• The report also highlighted weaknesses in internal coordination. Only 15% of companies said their audit, tax, legal, finance, technology, and operational workstreams were fully integrated under a single plan from the start.

KPMG warned that technology problems can create unexpected costs, complicate integration and undermine buyer confidence.

“AI may help accelerate elements of analysis and preparation, but it cannot make fragmented data pipelines reliable or resolve unclear ownership of controls,” the report stated.

Ultimately, KPMG’s findings suggest that private companies hoping to capitalize on a stronger IPO or M&A market may have more work to do before buyers come knocking. With exit timelines shifting and due diligence becoming increasingly demanding, companies that fail to address operational and technology gaps risk missing opportunities or accepting lower valuations when it’s time to cash out.

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