Private Equity Now Needs 12% EBITDA Growth to Earn What 5% Used To
Bain says the same 2.5x return now takes growth of 10% to 12% a year. Distribution data shows what happened to the vintages priced for the old math.
NEW YORK, October 6, 2026. Bain & Company has put a number on how much harder buyout returns have become. In the 2010s, a typical deal needed about 5% annual EBITDA growth. That was enough to return 2.5 times invested capital over five years. Bain’s February Global Private Equity Report says the same return now takes about 10% to 12%. Bain calls it “12 is the new 5.”
Where the gap comes from
Financing explains most of it. The 2010s had falling rates and rising multiples, and both did part of the work. Bain now cites borrowing costs of 8% to 9%. It also cites leverage ratios of 30% to 40% and record purchase multiples. Without cheap debt or multiple expansion, earnings growth has to carry the return.
Bain’s figures describe a typical global deal. They are not a middle-market measurement. But the logic applies wherever a sponsor pays a full price and borrows less.
What the vintages show
PitchBook’s global benchmarks put the 2014 to 2017 vintages near 2.0 times total value. That is as of December 31, 2024. The 2017 to 2021 vintages have returned less than they cost. Their distributions to paid-in capital sit below 1.0 times. The 2019 to 2021 vintages sit below 0.35 times. Foley & Lardner reported those figures in September.
Dakota’s second-quarter 2026 review reads the data the same way. The 2019 vintage has returned less than half of paid-in capital. The 2016 vintage is the latest where the median fund has returned more than it took in.
Time is part of the squeeze. With Intelligence puts the median hold at exit at 5.4 years in 2024. It was 4.3 in 2017. The figure fell in 2025 for the first time in five years. Bain separately puts buyout holds near seven years.
Bain’s benchmark assumes a five-year hold. By our arithmetic, a 2.5 times return over five years is a 20% IRR. Over seven years, it works out to about 14%.
What the numbers do not show
No public dataset tells us how many individual value creation plans are on target. Those figures stay inside each firm. We looked and did not find one.
The vintage data is global and covers all private equity funds. It is not limited to the middle market. Young vintages also show low distributions for ordinary reasons. The 2021 vintage is only four or five years old.
Bain’s 12% is also a rule of thumb. It is built on typical pricing and leverage. Any one deal can land well above or below it.
What to watch
Watch whether the 2025 dip in holding periods holds in the 2026 data. Watch whether the 2017 and 2018 vintages cross 1.0 times distributions. If they do not, the old math is still being paid for.