Private equity firms are facing an "existential crisis" as they sit on a record number of unsold companies, many of which they are unable to sell at desired prices. This backlog includes over 13,500 U.S. companies in private equity portfolios, with 2,563 consumer products and services companies and 1,536 healthcare companies. Hundreds of these have been held for years longer than typical investment periods, indicating a significant challenge in the industry.
Industry leaders acknowledge this issue, with Scott Kleinman, co-president of Apollo Asset Management, stating private equity "lost its way a bit" and that inventory of PE-owned companies is "really high." Victor Khosla, founder of Strategic Value Partners, described the sectors as "constipated." This exit backlog is not necessarily an indictment of the entire industry but reflects difficulties with deals made during periods of high valuations that no longer align with current market conditions. The average T+4 and T+5 investment retention rates for deals from 2018-2022 are 1300-1500 basis points above their comparable averages from 2009-2017, meaning approximately 1,400 more investments from that period are still held by sponsors.
Dealmaking remains at a decade low. The value of global buyout deals fell to $173 billion in Q1 2026, with an estimated $145 billion for Q2, the lowest since 2023. This is a sharp decline from the peak of $304 billion in Q1 2025. The technology sector has seen a particularly steep decline, with deal tech value plummeting from $118 billion in Q3 2025 to an estimated $12 billion in Q2 2026. The primary structural problem is liquidity, as distributions to institutional investors have remained low for four consecutive years, extending the average capital cycle to seven years.
The extended holding periods are creating valuation risks. The share of U.S. private equity-backed companies held for five to nine years has increased from 30% in 2016 to 46% in 2026. While companies held for less than five years often exit above valuation estimates (87% of the time), nearly one-third of companies held for over 10 years exit below their portfolio valuation. This aging portfolio suggests a growing risk of markdowns. Fundraising is also contracting, with global private capital fundraising estimated at $1.3 trillion in 2026, down from $1.4 trillion in 2023 and 2024, and significantly below the $1.9 trillion peak in 2021. One in five investors are reducing their buyout exposure, impacting fund new commitments.
