Private-equity firms are struggling to find buyers for their portfolio companies, but a hot market for IPOs is giving them another way out. More sponsors are considering taking their portfolio companies public, an exit route that is often a fallback option. Firms generally dislike the messy, prolonged mechanics of exiting the investment, along with the risk of falling share prices. Now that path is looking a lot more attractive, especially with firms under pressure to deliver payouts to institutional and wealthy investors, also known as limited partners.

While the June offering of Elon Musk’s Space X grabbed the biggest headlines, the broader IPO market is heating back up after a mostly quiet stretch, driven by demand in industries such as artificial intelligence, aerospace and defense. A range of private equity-owned companies have gone public lately too, including Jersey Mike’s, apparel brand Reformation and data-center company Csquare.

“Now that the public markets are finally open, private-equity firms are more than happy. If their company’s ready to go, they’ll do it,” said Sash Rentala, head of financial sponsors at investment bank Solomon Partners. There have been 21 U.S.-listed IPOs of private equity-backed companies this year through Aug. 5, the most since 2021, according to Dealogic. That compares with 20 in all of 2025 and 16 the year before. Blackstone President Jonathan Gray declared 2026 the “year of the IPO” on the firm’s earnings call earlier this year.