Private equity faces $860 billion of stagnant portfolio firms
PitchBook data shows that roughly one-third of U.S. private-equity-backed firms have been held for five years or more, tying up about $860 billion in assets.
New research from PitchBook reveals that about 33.8% of the 13,509 U.S. private-equity-backed companies have remained in investors’ portfolios for five years or longer, amounting to over 4,500 “zombie” firms. These stagnant assets represent roughly $860 billion in net asset value among funds that are more than seven years old. PitchBook analyst Kyle Walters explains that the phenomenon stems from the era of ultra-low interest rates, which enabled heavily leveraged buyouts at peak pandemic valuations.
With rates now at their highest in four decades, the financial engineering that once supported these deals is fading, leaving many firms bought at multiples that no longer justify their price. Walters cautions that while the current zombie load hampers fundraising, a broader crisis would require additional risk factors to trigger forced exits. He remains optimistic that market timing and strategic acquisitions will eventually resolve the backlog, even if the process is slow.
Why it matters
Stalled private-equity assets could limit capital for new investments and affect overall market liquidity.
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