I hate private equity for their history of buying good companies with borrowed money, stripping the assets by paying big bucks to the buyout execs and finally running the business into the ground with inferior maintenance, staffing and customer service. The “model” is for the execs, having stripped the company, to sell it after a few years for a fat payday.
It’s not working. Potential buyers have noticed the scheme and don’t want to shell out for a stripped business that’s deeply in debt and can barely make their interest payments, let alone make a profit. Especially since a lot of that money was borrowed at ultra-low interest rates in 2020-2021 and will need to be refinanced at much higher rates in 2026 - 2030.
Private-Equity Assets Stuck in ‘Zombie Funds’ Are at a Record High
Funds are outliving their intended lifespans as fund managers struggle to sell the remaining assets
By Mark Maurer, The Wall Street Journal, July 21, 2026
- U.S. private-equity assets stuck in funds at least a decade old hit an all-time high of $348.5 billion at the end of 2025, PitchBook data show.
- The slowdown in sales has created a liquidity crunch for some pension funds and insurance companies that need to meet payout obligations to retirees.
- Fund managers who bought assets at peak prices in 2020 and 2021 are struggling to find buyers willing to pay those prices at higher borrowing rates.
A record level of private-equity investments are stuck in funds limping along past their intended lifespans.
Often known as zombie funds, these funds are no longer raising money or making new acquisitions, in part because fund managers haven’t been able to sell their remaining assets. The net asset value of U.S. private-equity assets stuck in funds at least a decade old reached an all-time high of $348.5 billion at the end of 2025, according to PitchBook data. That is 3.5 times the amount in 2015 and more than 100 times that of 2005. …
Overall, the estimated value of portfolio companies that haven’t been sold totaled $3.91 trillion as of September 2025, locking up 74% of all North American private-equity assets on balance sheets… [end quote]
To put this into perspective, U.S. GDP is around $30 trillion so the amount that’s invested in private equity is about 10% of GDP, a huge amount.
To be fair, not all private equity runs a business into the ground. The eye surgery practice where I had my cataracts replaced in May is one of several operated by a private equity group. They ran a highly professional operation and I have absolutely no complaints. The private equity group says on its web site that they plan to run these eye surgery businesses long-term and have no intention to sell. (The surgeon is an employee and would not have the skills or desire to run the practice as a business.)
But most of the private equity groups do want to sell in the short term to provide liquidity for the investors. The pension funds and insurance companies have obligatory payouts and need liquidity. They don’t want their assets stuck indefinitely in zombies.
Wendy