For an industry prized for its discretion, private equity’s problems have become uncomfortably public.
Despite a pickup in dealmaking in the latter half of the year, the industry is sitting on a backlog of at least 31,000 companies valued at $3.7 trillion, according to the most recent data from Bain & Company. That’s higher than last year’s 29,000-company record backlog valued at $3.6 trillion. Private equity firms typically make money for their investors, such as pension funds and endowments, by buying companies, revamping them and either selling them at a profit or taking them public.
They’ve had a harder time finding an exit than Zoomers trying to read a folded road map. The Times reported that private equity firm Thoma Bravo hasn’t been able to sell two companies it owns (data analytics firm J.D. Power and software company ConnectWise) at an acceptable price, and that Roark Capital still hasn’t moved forward with plans for an IPO for Dunkin’-parent Inspire Brands. Some firms are even stuck with so-called “zombie companies” that aren’t growing or attracting buyers.
2026 Forecast
There have been comeback predictions before, but this time, Wall Street pros say that things are actually looking up for the floundering private equity market:
- Goldman Sachs CFO Denis Coleman recently said that private equity dealmaking is improving, with many “jumbo” deals now “percolating.”
- PitchBook analysts’ private-market outlook for 2026 includes the industry entering a “new phase of measured momentum,” with platform buyouts accounting for at least 25% of total private equity deal activity next year.
AI’s Role: As with most industries nowadays, artificial intelligence is reshaping private equity. David Miller, Morgan Stanley’s global head of private credit and equity, recently wrote that half of the portfolio companies in its private-equity middle market funds have active AI initiatives. “As AI models become more capable in 2026, the competitive moat for tech-enabled mid-market businesses will deepen, making them attractive targets for private equity investment and exit,” he added.