What is dry powder?
Dry powder is capital that private equity funds have raised from investors but not yet invested. It funds new buyouts, add-on acquisitions and support for existing portfolio companies. Large amounts of dry powder mean many buyers competing for deals. That competition, plus investor pressure to put capital to work, can push valuation multiples up.
Why it matters to a revenue leader
Dry powder shapes the market a PE-backed company will sell into. When funds hold a lot of unspent capital, well-run services companies with recurring revenue attract more bidders, and add-on targets get more expensive. For a CRO at a platform, high dry powder means tougher competition for acquisitions and a stronger exit market for a company that can prove its growth.
Example
Fictitious numbersA commercial landscaping platform tries to buy a regional competitor and finds three other funds bidding. The price rises from 6 to 8 times EBITDA. The sponsor still wins, but the higher price raises the bar for the cross-sell revenue the CRO must deliver from the deal.
"How competitive is the market for companies like ours, and what would make a buyer pay at the top of the range?"
Sources
- Dry Powder checked 9 Oct 2026
- Dry powder in private equity (McKinsey) checked 9 Oct 2026