Information on the target
The Lincoln Private Market Index (LPMI) serves as a critical benchmark for tracking changes in the enterprise value of U.S. privately held companies. As of the fourth quarter of 2025, the LPMI recorded a modest increase of 1.9%, primarily driven by EBITDA growth, while enterprise value multiples remained relatively stable. This performance reflects the ongoing dynamics within the private equity landscape, where the demand for high-quality assets continues to influence valuations.
In comparison, the S&P 500 experienced a growth rate of 2.3% during the same period, largely propelled by the performance of the "Magnificent 7" tech companies. However, the LPMI's full-year growth of 9.9% fell short of the S&P 500's 15.6% and 11.9% growth rates when excluding the top tech performers. This divergence highlights the unique challenges and opportunities faced by private companies in a fluctuating economic environment.
Industry overview in the target’s specific country
The private equity market in the United States has shown resilience despite macroeconomic uncertainties. In 2025, buyout volumes and valuations for top-tier companies remained robust, with enterprise valuation multiples for these firms exceeding levels observed during the market peak in 2021. This trend underscores a competitive landscape where investors are willing to pay premiums for high-quality assets, as evidenced by notable transactions such as Parker-Hannifin's acquisition of Filtration Group for $9.25 billion at a multiple of 19.6x EBITDA.
Furthermore, the average buyout multiple rose to 13.1x EBITDA, surpassing previous peaks, while leverage levels reached 5.2x, indicating a strong appetite among sponsors and lenders to deploy capital. The direct lending market has also remained competitive, with new issue terms for borrowers in the $40 million to $100 million EBITDA range remaining historically tight, reflecting a favorable environment for capital deployment.
However, as the year progressed, the growth of private company EBITDA began to slow, with a decline from 6.5% in Q2 to 4.7% in Q4. This trend raises concerns about the sustainability of valuations and the potential impact of external factors such as tariff implications on future performance. The percentage of private companies reporting EBITDA growth remained steady at around two-thirds, but the overall magnitude of growth suggests a cautious outlook for 2026.
As the private equity landscape evolves, the interplay between competition for quality assets and the performance of underlying companies will be crucial in shaping future investment str…