Q3 2023 Lincoln Private Market Index

Lincoln Private Market Index Increases Marginally on Higher Fundamental Performance Despite Multiple Pressure

The Lincoln Private Market Index (Lincoln PMI) reveals that in Q3 2023, private market enterprise values (EVs) increased 0.8%. The Lincoln PMI’s increase contrasted with the movement of the S&P 500, which decreased 3.7% since the second quarter. Larger companies performed the best this quarter as companies with more than $50 million of EBITDA grew 1.3% whereas companies with under $20 million of EBITDA declined in value by 1.4%. The increase in the Lincoln PMI was due to persistent earnings growth but was offset yet again by multiple contraction. However, earnings growth was under pressure as Lincoln observed slowing revenue growth this quarter.

About the Lincoln Private Market Index

The Lincoln PMI is a first-of-its-kind index measuring changes in the enterprise values of private companies over time – and a barometer of the performance of private companies generally. The Lincoln PMI enables private equity firms and other investors to benchmark how private company investments are performing against peers, and how this performance correlates to the S&P 500.

Lincoln designed the Lincoln PMI to solve this problem by measuring the quarterly change in enterprise values for private companies primarily owned by private equity firms. Enterprise value is the sum of a company’s equity value and debt.

  • Quarterly Overview

    • 25th Edition: Covers Q3 2023
    • Measures quarterly changes in the enterprise values of ~1,500 private companies, based on a population of approximately 4,500+ companies primarily owned by private equity firms with a median EBITDA of ~$40-45 million
    • Analyzes the impact from the change in company earnings versus market valuation multiples
    • Assess the change in value for six industry sectors
  • Click here to download a printable version of this report.


Private Markets Remain Insulated Amidst Public Market Volatility

(NOTE: Both the Lincoln PMI and S&P 500 EV returns above reflect enterprise values)
(S&P 500 EV excludes financial companies for which enterprise value is generally not meaningful; however, including such companies produces similar results)


Q3 ’23 YTD LTM
LPMI 0.8% 4.8% 7.2%
S&P 500 EV (3.6%) 12.5% 18.1%

Sector Breakdown

Industrial Valuations Declined While Other Industries Saw Flat-To-Modest Growth

Industry Q3 ’23 YTD LTM
Bus Services 1.1% 6.9% 10.6%
Consumer 0.0% 1.0% 1.7%
Energy 1.3% 11.5% 1.5%
Healthcare 0.8% 2.7% 4.9%
Industrials (1.1.%) 3.8% 9.2%
TMT 1.4% 5.1% 5.6%

Examining the Lincoln PMI

EBITDA Multiples Versus Earnings

Expansion of LPMI valuation multiples since Q1 2014

Examining the Lincoln PMI

Comparing Enterprise Value Growth by EBITDA Size

(Low is includes companies with LTM EBITDA <$20 million, Mid includes companies with LTM EBITDA of $20 million to $50 million and High includes companies with $50 million to $250 million)

While private company enterprise values tracked by the Lincoln PMI grew in aggregate in Q3 2023, not all companies were the beneficiary of this growth. Smaller companies’ (i.e., those with less than $20.0 million of EBITDA) enterprise values decreased 1.4%, whereas enterprise values of larger companies (i.e., those with EBITDA of $50.0 million to $250.0 million) increased 1.3%.

While there have been times historically when enterprise values of smaller companies grew more quickly than larger companies, larger companies have outperformed smaller companies more recently. In fact, larger companies have both grown earnings at a faster rate than smaller companies and benefited from more stable valuation multiples over the last four quarters. In Q3 2023, the enterprise value decline of smaller companies was driven by greater multiple contraction relative to larger companies. This disparity is likely a result of an increased likelihood of customer concentration, difficulties in passing along rising costs, and less product / service offering diversification.


The Lincoln PMI

General Observations

  • Private company enterprise values increased for the fifth consecutive quarter as the Lincoln PMI increased 0.8%, a slowdown from the increase of ~2% in each of the last four preceding quarters.
  • Unlike the Lincoln PMI, the S&P 500 enterprise values declined in Q3 2023. While earnings for both private and public market companies grew, the S&P 500 experienced a greater degree of multiple contraction.
  • Since its inception in Q1 2014, the Lincoln PMI has shown that private company enterprise value multiples have been less volatile than public company multiples and that earnings are the primary factor driving long term value creation.

Enterprise Value Results

  • Fundamental performance remains under pressure as revenue growth slowed to single digits in Q3 2023. Should slowing demand persist, private company enterprise values could start to see a decline.
  • Despite continued selectivity and focus on recession-resilient companies, multiples for new leverage buyout transactions have declined since the beginning of 2023; buyers remain focused on meeting targeted returns, while grappling with the burden of interest costs and reduced debt capacity.
  • Smaller companies experienced a decrease in enterprise value which contrasted the increase in enterprise values of larger companies, as the benefits of scale, diversification and negotiating power continue to attract investors in an uncertain post-pandemic macroeconomic environment.

Industry Breakdown on an Enterprise Value Basis

  • Consumer companies continue to feel the pressures of a recessionary environment and have seen the slowest enterprise value growth in 2023.
  • TMT companies have seen steady enterprise value growth over the last year as more TMT companies turn focus towards profitability versus revenue growth.

In Summary, we believe the Lincoln PMI

  • Enables investors in private companies, including private equity firms, to benchmark their investments against their peers and the S&P 500 on both enterprise value and equity value bases;
  • Demonstrates that private companies generate returns comparable to major public stock market indices with less volatility;
  • Offers many unique valuation insights into the fair value of private companies for a wide array of stakeholders and investors; and
  • Represents a significant enhancement to the information available to investors in private companies.


Source of Data and Sample Size

On a quarterly basis, Lincoln determines the enterprise fair value of over 4,500+ portfolio companies for over 140 sponsors (i.e., private equity groups and lenders to private equity groups). These portfolio companies report quarterly financial results to the sponsor or lender. Lincoln obtains this information and determines the appropriate enterprise value multiple so as to compute the enterprise value in accordance with the fair value measurement principles of generally accepted accounting principles. In assessing enterprise value, Lincoln relies on well accepted valuation methodologies such as the market approach and income approach considering each company’s historical and projected performance and other qualitative and quantitative factors. Finally, each valuation is then vetted by auditors, company management, boards of directors and regulators. Upon concluding each quarterly valuation cycle, Lincoln aggregates the underlying financial performance and enterprise value data for analysis.

To construct the Lincoln PMI, Lincoln selects a subsection of the companies valued each quarter, including private companies each generating earnings before interest, taxes, depreciation and amortization of less than $250.0 million, disregarding venture-stage businesses and non-operating entities, such as special purpose entities that own real estate and specialty finance assets.

For more information, visit www.lincolninternational.com/services/valuations-and-opinions/lincolnpmi


portfolio companies are evaluated by Lincoln on a quarterly basis to determine their Enterprise Fair Value
sponsors participate in LPMI i.e. private equity groups & lenders to private equity groups


Academic Advisors

Professor Steven Kaplan

Professor Steven Kaplan is a Senior Advisor to Lincoln’s Valuations and Opinions Group. He is the Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance and Kessenich E.P. Faculty Director at the Polsky Center for Entrepreneurship and Innovation at the University of Chicago Booth School of Business. Among other courses, Professor Kaplan teaches advanced Master of Business Administration and executive courses in entrepreneurial finance and private equity, corporate finance, corporate governance and wealth management. Professor Kaplan conducts research on a wide array of issues in private equity, venture capital, corporate governance, boards of directors, mergers and acquisitions and corporate finance. He has been a member of the Chicago Booth faculty since 1988.

Professor Kaplan serves on the board of Morningstar and several fund and company advisory boards. He is also a Research Associate at the National Bureau of Economic Research.

Professor Kaplan received a Bachelor of Arts, summa cum laude, in applied mathematics and economics from Harvard College and earned a Doctor of Philosophy in business economics from Harvard University.

Professor Michael Minnis

Professor Michael Minnis is a Senior Advisor to Lincoln’s Valuations and Opinions Group. He is the Charles E. Merrill Faculty Scholar and a Professor of Accounting at the University of Chicago Booth School of Business, where he researches the role of accounting information in allocating investment efficiently by both managers and capital providers. His recent research focuses on understanding the role of privately held companies in the U.S. economy and how these firms use financial reporting to access, deploy and manage capital. He particularly enjoys identifying unique data and methods to empirically examine issues in a novel way.

In January 2018, Professor Minnis became a member of the Private Company Council, the primary advisory council to the Financial Accounting Standards Board (FASB) on private company issues. Professor Minnis received his Ph.D. from the University of Michigan and his Bachelor of Science from the University of Illinois, where he graduated with highest honors.

Meet Our Senior Team

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IMPORTANT DISCLOSURE: The Lincoln Private Market Index is an informational indicator only, and does not constitute investment advice or an offer to sell or a solicitation to buy any security. It is not possible to directly invest in the Lincoln Private Market Index. Some of the statements above contain opinions based upon certain assumptions regarding the data used to create the Lincoln Private Market Index, and these opinions and assumptions may prove incorrect. Actual results could vary materially from those implied or expressed in such statements for any reason. The Lincoln Private Market Index has been created on the basis of information provided by third-party sources that are believed to be reliable, but Lincoln International has not conducted an independent verification of such information. Lincoln International makes no warranty or representation as to the accuracy or completeness of such third-party information.

The LPMI should not be construed as an offer to sell or buy, or a solicitation to sell or buy, any products linked to the performance of the LPMI. The use of the LPMI in any manner, including for benchmarking purposes, is not endorsed or recommended by Lincoln International and Lincoln International is not responsible for any use made of the LPMI. Lincoln International does not guarantee the accuracy and/or completeness of the LPMI and Lincoln International shall not have any liability for any errors or omissions therein. None of Lincoln International, any of its affiliates or subsidiaries, nor any of its directors, officers, employees, representatives, delegates or agents shall have any responsibility to any person (whether as a result of negligence or otherwise) for any determination made or anything done (or omitted to be determined or done) in respect of the LPMI and any use to which any person may put the LPMI. Lincoln International has no obligation to update the LPMI and has no obligation to investors with respect to any product based on the performance of the LPMI. Any investment in such a product will not acquire an interest in the LPMI. Lincoln International is not an investment adviser and will not provide any financial advice relating to a product linked to the performance of the LPMI. Investors should read any such product offering documentation and consult with their own legal, financial and tax advisors before investing in any such product.

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