The Pig in the Python: Adapting the Middle-Market PE Exit Playbook for 2025
Atlanta, GA — The middle-market private equity exit landscape has undergone a fundamental shift, and the strategies that were effective a few years ago may no longer deliver the results LPs expect.
With average hold periods now at 6 years and a portfolio inventory that could take 9 years to clear, PE firms are facing what we’re calling the “pig in the python” challenge: a backlog of aging assets that need strategic management and eventual exits.
We’re pleased to share Configure Managing Director Joseph Weissglass’ recent article titled The Pig in the Python: Adapting the Middle-Market PE Exit Playbook for 2025. The piece details the secondary market boom and how sponsors are finding creative ways to deliver returns despite an unpredictable market.
Read the full article below.
The Pig in the Python: Adapting the Middle-Market PE Exit Playbook for 2025
As the middle-market exit landscape continues to be defined by prolonged holding periods and evolving exit routes, private equity firms have further learned to grapple with their new reality.
Portfolio companies are being held longer than the traditional 3-5-year horizon as exit markets tightened in 2023–2024 and have not yet returned to a normal pace. Traditional exit options like IPOs and sponsor-to-sponsor sales slowed dramatically amid high interest rates and valuation gaps, forcing sponsors to explore alternative liquidity strategies to return capital to LPs in a timely manner.
As we turn into the 4th quarter of 2025, optimism is cautiously returning after a spring fraught with geopolitical concerns. Strategic buyers are reengaging, the secondary market is booming with GP-led deals, and sponsors are finding creative ways to deliver returns to LPs despite the challenges.
The Aging of Portfolio Companies: Longer Holds and Portfolio Inventory
According to Pitchbook, the current average hold time of exited companies is around 6 years through H1 of 2025 — down from the unprecedented level of 7 years in 2023, but still above the pre-pandemic level of 5.2 years. The current inventory of U.S. PE portfolio companies has now reached a level that could possibly take 9 years to clear, and private equity firms are opting to sell their highest quality assets, still leaving a backlog of lesser-quality assets that must be cleared to move forward.
The challenging exit market and increased holding periods have not only prevented the return of capital to investors but also have made raising new funds increasingly difficult. Again, based on Pitchbook data, PE firms hold more than 28,000 assets — 40% of which have been held for longer than four years.
Why are assets continuously getting relegated to the backlog? The post-pandemic environment saw macro shocks (COVID-19 disruptions, higher interest rates, inflation, geopolitical uncertainty) and a mismatch in valuation expectations between buyers and sellers. Rather than sell at discounted prices, many GPs chose to hold onto promising companies through the turbulence, banking on future recovery. This patience, while protecting long-term value, has created a “pig in the python” of older assets that now need to be managed and eventually exited.
The Rise of Secondaries and Continuation Funds
Facing the twin pressures of aging portfolios and tough exit markets, many private equity firms have turned to secondary transactions as an alternative to a traditional sale. In particular, continuation fund deals — where a sponsor sells one or more assets from an older, existing fund into a new vehicle (often backed by secondary investors) — have surged. According to reports by Torys and Preqin, continuation fund vehicles held a 13-14% share of all private equity exits in 2024, with $31.1b raised across ~85 funds. Now, in H1 of 2025, continuation funds represent a total of 19% of private equity exits, representing $41b — a 60% increase from H1 of 2024, according to Financial Times.
These numbers mean GP-led deals are no longer niche; they have become a popular option for sponsors to circumnavigate challenges associated with traditional exits while retaining high-potential assets for longer.
Additionally, the broader secondary market hit record levels, fueled by GP-led activity. According to Lazard, global secondary transaction volume reached $152b in 2024, the highest ever, with GP-led deals comprising almost half of that (about $72b). This represents a ~50% jump in GP-led deal value from the prior year, with a majority of these transactions coming in the form of continuation vehicles rather than GP tenders or preferred equity trades. The trend has continued well into 2025. In the first half of the year, the secondary market reached approximately $102b in transaction volume, which is the highest ever recorded for any half-year period, according to the Wall Street Journal.
GP-led secondaries provide a win-win liquidity solution in a stagnant exit market. They allow GPs to hold onto prized assets longer — especially companies that are still growing by the initial fund’s term — while giving existing LPs an option to cash out or reinvest alongside the GP and participate in the next hold period. With over 50% of PE funds now 6+ years old and an estimated 1,600+ funds coming to their scheduled end by 2025 – 2026, continuation vehicles have become a critical tool to manage the maturity wall.
LPs, for their part, have grown more receptive to these processes as a method to obtain liquidity in the absence of the traditional exit route. However, thorough due diligence and alignment of interest are essential to ensure fair outcomes. For middle-market private equity firms, exploring a GP-led secondary or single-asset continuation fund is now a standard consideration when traditional exit paths are limited or nonexistent.
Creative Liquidity Strategies for Middle-Market GPs
Beyond full exits, sponsors are increasingly executing partial liquidity events to deliver returns, which include selling minority stakes in a portfolio company to new investors or growth equity firms. This method allows the PE fund to take some chips off the table while retaining a controlling stake for future upside. Such minority recapitalizations gained traction as an interim strategy when outright buyers were scarce. Another approach has been leveraged dividend recapitalizations, where a company borrows (often from private credit lenders) to fund a dividend to its PE owners. Dividend recaps have been providing much-needed liquidity for distributions over the last three years.
Middle-market funds have also been exploring fund-level solutions. Some have arranged NAV loans and preferred equity at the fund level — borrowing against the portfolio’s net asset value — to generate distributions for LPs. The common theme is flexibility: GPs are employing every tool available to deliver some liquidity and returns in a tougher exit climate.
Planning and Executing Exits in the 2025–2026 Environment
In today’s market, exit planning is no longer a late-stage activity; it’s part of long-term strategy. Middle-market private equity firms are starting preparations earlier than ever. It’s now common to conduct sell-side market studies and quality of earnings analyses well ahead of formally launching a sale process. Proactively identifying and addressing value gaps, cleaning up financials, and crafting a compelling growth story will position portfolio companies to attract buyers when the window opens. Early planning also means tracking potential acquirers (both strategic and sponsor) over time and building relationships so that when an exit opportunity arises, the groundwork is laid for a smooth deal. Given unpredictable market swings, private equity firms should keep multiple exit options open, which may involve a dual-track process or at least being ready to pivot, should it be necessary.
About Configure Partners
Configure Partners is a credit-oriented investment bank specializing in debt placement. The firm provides the highest level of client service and execution to middle-market private equity sponsors in acquisition finance, refinancing, and dividend recapitalization transactions. Configure is one of the largest firms dedicated to debt advisory. We’ve developed our processes and systems to ensure execution across all types of financing transactions. Unlike other debt placement groups, we don’t treat debt advisory as a secondary service offering to M&A — debt placement is our entire business.
Importantly, we consider ourselves an extension of our clients in the market, and we treat lenders accordingly. The cumulative effect of this approach is particularly powerful in a more difficult financing environment where debt capital is less “abundant.” The results of the Configure methodology speak for themselves, with over 80% of our revenue coming from a repeat source of business.
If the above article has sparked a question or thoughts concerning hiring an advisor, please feel free to reach out to any of our Configure team members or visit our website at https://configurepartners.com/.
About Joseph Weissglass
Joseph has focused his career on providing advisory services to middle-market companies regarding debt advisory, liability management, and restructuring engagements.
Joseph joined Configure Partners from the Middle-Market Special Situations practice at Guggenheim Securities, where he served as Vice President. Prior to joining Guggenheim, he was part of the Global Finance and Restructuring Group at Barclays Capital in New York.
Joseph graduated with a B.S. in Construction Science and Management from Clemson University and with an MBA from the University of North Carolina Kenan-Flagler Business School. He is a FINRA General Securities Representative (Series 24, 63, 79) and holds the Certified Insolvency and Restructuring Advisor (CIRA) and the Certification in Distressed Business Valuation (CDBV) designations.
Joseph remains active as a thought leader in the private debt space. His insights and commentary on market trends have been featured in industry publications, including Bloomberg, Private Equity Professionals, Mergers & Acquisitions, Private Debt Investors, PitchBook, The Deal, and LSEG Loan Connector.