What's Happening?
A new survey by KPMG LLP, the U.S. audit, tax, and advisory firm, indicates that 58% of private company leaders are altering their expected liquidity timelines. Despite this shift, only 21% are actively preparing for multiple transaction paths. The report,
titled "Exit optionality: Strategic agility for private companies," surveyed 301 senior decision-makers at privately held U.S. companies during the third quarter of 2026. It highlights that while high-profile IPOs might suggest a robust exit environment, the broader private market experiences more inconsistency. A significant 26% of private companies have encountered delays, restructurings, or cancellations of deals due to unexpected readiness gaps. These gaps often extend beyond traditional financial preparedness, with 37% facing intense cybersecurity scrutiny and 33% encountering technical debt issues during due diligence processes. The most common impacts of these delays include lower valuations or reduced proceeds (22%), extended holding periods (17%), and increased transaction advisory fees (13%).
Why It's Important?
This trend underscores a critical vulnerability within the U.S. private company sector, where a lack of strategic foresight in exit planning can lead to substantial financial repercussions. The findings suggest that many private companies are overly reliant on a single exit strategy, leaving them exposed to market volatility and unforeseen challenges. The emergence of cybersecurity and technical debt as significant barriers in due diligence indicates a broader shift in what constitutes 'readiness' for a transaction. Companies that fail to address these non-financial aspects risk not only deal delays or cancellations but also diminished valuations and increased operational costs. This situation could impact the overall health of the private market, potentially slowing down mergers and acquisitions, and limiting capital flow for growth and innovation. For stakeholders, including investors and employees, these delays can create uncertainty and affect long-term financial planning and stability.
What's Next?
Private companies are considering various liquidity options, including strategic sales (43%), sales to private equity investors (34%), majority recapitalizations (18%), and traditional IPOs (16%). However, merely considering these options does not equate to preparedness. Less than half (48%) of companies are confident they could pivot to an alternative path without significant delays, additional costs, or valuation losses. Shari Mager, KPMG Private Emerging Growth Advisory Leader, KPMG US, and Global Capital Markets Readiness Leader, emphasizes that companies best positioned for successful exits are those that undertake preparatory work well in advance, regardless of the exact timing or method of exit. This proactive approach provides the flexibility to act when opportune moments arise. The report also highlights that only 15% of private companies have fully integrated their audit, tax, legal, technology, and financial workstreams from the outset, suggesting a need for more holistic and integrated readiness strategies.
Beyond the Headlines
The survey's findings point to a deeper issue concerning the strategic agility and operational resilience of private companies in the U.S. The increasing scrutiny on cybersecurity and technical debt during due diligence reflects a growing recognition that these elements are not merely operational concerns but fundamental drivers of enterprise value and risk. Companies that neglect these areas may face not only financial penalties but also reputational damage and increased regulatory pressure. This situation could catalyze a broader re-evaluation of corporate governance and risk management practices within the private sector, pushing companies to adopt more comprehensive and integrated approaches to exit planning. The emphasis on 'optionality' suggests a shift towards a more dynamic and adaptable business environment, where companies must be prepared for multiple scenarios to thrive amidst ongoing market uncertainties.
