Holding period analysis
A new dimension in reporting
In this edition, we deepen our analysis of investment trends by holding period, building on the foundation laid in last year’s report.
Last year, we focused on the first three years of holding periods. This year, we extend our scope to include a fourth year, reaffirming our commitment to delivering comprehensive insights.
This expanded analysis is made possible by the improved response rate to our survey and the high quality of the data collected. It highlights the strength of our dataset and the industry's continued commitment to transparency and detailed reporting.
The holding period – the length of time a private equity firm retains an investment in a portfolio company before exit –sheds light on investment strategies, market dynamics, and the overall lifecycle of private equity ownership, while also offering insight into its impact on job creation and growth.
With this analysis, we aim to explore the relationship between investment duration and employment growth, providing a deeper understanding of how holding periods correlate with job creation.
This section is still in its developmental stages. As we continue to gather and analyse data, we look forward to further enhancing this section. The ongoing support of our stakeholders in providing high-quality data is invaluable, enabling us to refine our analysis and deliver deeper insights into the nuanced relationship between holding periods and job growth.
Given the highly skewed nature of the dataset (skewness = 112, kurtosis = 15,934), outlier handling was necessary to improve statistical reliability. In the previous edition, we applied the interquartile range method to remove outliers, but with the increased amount of data this year, Windsorization has proven to be more appropriate. Traditional trimming methods (e.g., 10th-90th percentile) risked removing valid high-growth start-up cases, while weaker Windsorization (e.g., 1st-99th percentile) failed to adequately control extreme outliers. The 5th-95th Windsorization method was selected as the best balance, capping extreme values while preserving the natural variation in job creation among VC- and PE-backed companies. This approach reduced skewness to 2.2 and kurtosis to 6.8, ensuring a more stable yet representative dataset.
See Methodology section for full methodology
Average job creation by holding period 2017-2023
By portfolio company
Holding period analysis: results
Over the course of the first holding year, the average job creation increases by 35%, mostly driven by the high increase in employment in venture stage portfolio companies. As investments mature into their second year, there is a noticeable moderation in job creation rates, with the average year-on-year job creation declining to 22%, and 18% during the third year. Lastly, during the fourth year of holding, job growth is 14%.
The trend of job creation differs considerably if we analyse it by stage. Younger companies present a steeper slope: venture stage companies show a 51% increase in job creation in the first holding period, and 17% in their fourth year of holding.
As opposite, portfolio companies at a buyout stage show a much flatter slope: job growth rises by 15% in the first holding year, and then it slowly decreases, reaching 9% in the fourth year.
Moreover, we analysed the differences between regions and sectors. Although regions do not differ significantly from one another, France and the Benelux has a much flatter slope in year-on-year job creation compared to the others, while the Nordics and CEE regions show steeper slopes. In terms of sectors, Business Products & Services and Consumer Goods & Services have a much flatter slope compared to the others. This difference seems due to the fact that there are more buyout stage companies than venture stage companies operating in these two sectors, while it is the opposite for the other 4 sectors, which present a high ratio of venture over buyout stage companies.