Private equity’s liquidity crunch persists, with USD 3.8 tn in assets still waiting for exit

The private equity industry gives the impression of a roaring comeback in 2025, with global buyout transaction value rising 44% to USD 904 bn and exit value climbing 47% to USD 717 bn, according to Bain & Company’s Global Private Equity Report 2026 (pdf). However, beneath the surface, the industry is experiencing a “K-shaped” recovery where a handful of elite funds are thriving while the broader market struggles with a severe liquidity crunch.

The rebound, however, has been uneven. The massive surge in 2025 transactions was not a broad market recovery — it was heavily concentrated. Just 13 “megadeals” valued at USD 10 bn or more accounted for 69% of the growth in transaction value last year, including the record-breaking USD 56.6 bn take-private of Electronic Arts. Outside of this elite bracket, the overall number of buyout transactions fell by 6% globally.

The industry’s most stubborn challenge is the mounting of aging, unsold assets. Private equity firms are currently sitting on roughly 32k portfolio companies representing a staggering USD 3.8 tn in unspent capital. Because firms are holding onto assets longer — an average of about seven years compared to the historic five or six — distributions back to investors have ground to a halt.

Distributions as a percentage of net asset value remained stuck at 14% last year. This marks the second-lowest level since the depths of the 2008 financial crisis, with the industry suffering four straight years of below-average distributions. The liquidity drought is directly impacted by the ability to raise new capital. Global buyout fundraising tumbled 16% last year to USD 395 bn, another fourth straight year of declines. 53% of LPs report being constrained from making new fund commitments because prior commitments have not yet been drawn down.

Easy money is over: Historically, firms relied on rock-bottom interest rates and expanding valuation multiples to generate returns. Under the old model, a firm only needed to grow a portfolio company’s EBITDA by about 5% annually to hit its return target. Today, borrowing costs sit in the %8–9% range, and purchase multiples are stubbornly flat. “Given where the interest rates and the entry and exit multiples are, you need to grow 12% each year for five years to get the same returns,” Rebecca Burack, head of global private practice at Bain, told Bloomberg, stating that “12 is the new 5.”

To achieve this aggressive 12% growth, the basis of competition has shifted. “What we’re experiencing… is a K-shaped recovery in a world where low prices, cheap debt, and easy multiple expansion are gone for the foreseeable future,” said Hugh MacArthur, chairman of Global Private Equity at Bain. Moving forward, the private equity players that attract capital will be the ones that can prove a repeatable, data-backed edge. “The [successful] firms will build systems, not slogans. They will invest in talent and AI, and move from full potential diligence to execution on Day 1,” MacArthur noted.

MARKETS THIS MORNING-

Asia-Pacific markets were a sea of green this morning, as investors expected US President Donald Trump’s state of the union speech to provide more clarity on trade policies. Korea’s Kospi was leading gains as chipmakers inched higher and Japan’s Nikkei was followed closely behind.

The values in the table above are listed according to the market position as of 3:30pm IST / 2pm GST.