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Private equity groups built up a record backlog of almost $4tn in unsold investments last year, even as dealmaking started to revive after a years-long downturn.
The value of companies sitting in buyout funds increased by 3 per cent to $3.8tn in 2025, according to a report from consultancy Bain & Company, despite more than $700bn of exits during the year.
Private equity firms have struggled to buy and sell companies since interest rates soared in 2022, with higher financing costs and an uncertain economic outlook weighing on valuations.
Hugh MacArthur, chair of the global private equity practice at Bain, said there was “little case in the near term that interest rates are going to dramatically go down”, meaning companies’ valuations were unlikely to rise to a higher multiple of earnings in the way they had previously.
Bain said that private equity funds were holding investments for about seven years before managing to exit, up from five to six years in the period between 2010 and 2021. Investments tend to grow less in value the older they are, Bain added, particularly once they have been owned by private equity for eight years or more.
Separate data from Preqin showed a rise in so-called zombie funds which continue to hold ageing investments while being unable to deploy new capital.
The unrealised value of private equity vehicles more than 10 years old rose sixfold in the past decade to more than $1tn as of June, while the total value of the industry’s assets grew just over threefold.
Firms did manage to exit a number of big investments, with the total value of exits increasing by almost half to $717bn. That was the highest total in data going back to 2006, with the exception of the dealmaking frenzy unleashed in 2021 during the Covid-19 pandemic.
Seven large exits accounted for a fifth of that total however, with the number of deals struck down 2 per cent.
Big acquisitions also accounted for most of the increase in the value of private equity acquisitions, with 13 megadeals helping lift the total by just under half to $904bn despite a fall in the number of purchases.
The data suggests that private equity firms’ fortunes are diverging, with some big buyout groups becoming more active while many smaller competitors languish.
Difficulty cashing in investments has meant firms have struggled to return cash to investors. Those investors have in turn been less able to reinvest in new funds, with a decline in the total number of funds that closed last year of 23 per cent.
Bain said the industry was at an “inflection point” and that most buyout firms would “have to raise their value-creation game substantially” to win more choosy fund investors.
