{"id":695,"date":"2025-06-30T23:46:50","date_gmt":"2025-06-30T23:46:50","guid":{"rendered":"https:\/\/www.sterlingcooper.info\/blog\/?p=695"},"modified":"2025-06-30T23:46:50","modified_gmt":"2025-06-30T23:46:50","slug":"well-known-private-equity-firms-stuck-with-over-668-billion-in-bad-deals-and-12000-business-they-can-not-sell","status":"publish","type":"post","link":"https:\/\/www.sterlingcooper.info\/blog\/well-known-private-equity-firms-stuck-with-over-668-billion-in-bad-deals-and-12000-business-they-can-not-sell\/","title":{"rendered":"WELL KNOWN PRIVATE EQUITY FIRMS STUCK WITH OVER $668 BILLION IN BAD DEALS, AND 12,000 BUSINESS THEY CAN NOT SELL!!!"},"content":{"rendered":"
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Deal Drought Adds To Private-Equity Costs<\/p>\n<\/div>\n

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Private equity\u2019s three-year deal slump has worsened a longstanding problem: billions of dollars of aging, underwater funds that continue to cost investors money.<\/span><\/p>\n

The slowdown in mergers and acquisitions that began in 2022 has made private equity less profitable and reduced the amount of money firms return to investors. While this year began with hopes of a recovery, the slump has persisted, and shares of the biggest firms\u2014<\/span> Blackstone, Apollo Global Management\u00a0 and<\/span> KKR \u2014 are down 10% or more in 2025. Over the same time, the S& P 500 has risen roughly 5%.<\/span><\/strong><\/p>\n

Beyond hitting profits, the slump has delayed the timeline for private-equity firms to sell investments, adding to the pile of so-called tail-end funds, those a decade or more old.<\/span><\/p>\n

Firms had $668 billion of private-equity assets globally stuck in tail-end funds as of the most recent data, from the end of 2023, 19% higher than the previous year, according to a forthcoming report from Treo Asset Management, a special-situations firm.<\/span><\/p>\n

\u201cFunds are getting older, and the holds are getting longer,\u201d said Finbarr O\u2019Connor, Treo\u2019s chief investment officer and founding partner. While the report is based on data more than a year old due to a lag in when firms issue financial data, O\u2019Connor says the trend continues, and he forecasts tail-end assets to hit $1 trillion in coming years.<\/span><\/p>\n

Many of these deals are underwater. The Treo report showed more than a third of<\/span> assets held eight years or more are worth less than the initial capital invested.<\/span><\/p>\n

These stuck funds can be a double blow for a fund\u2019s backers: Often unsuccessful investments that are hard to sell, they raise investor costs by extending the annual management fee for years past the usual term.<\/span><\/p>\n

Fund limited partners are likely paying between $3 billion and $13 billion a year in management fees on the $668 billion in tail-end assets, based on the typical fee range of 0.5% to 2% of net asset value, according to Treo\u2019s estimate. Firms often reduce a fund\u2019s management fee from the industry-standard 2% once it enters tail-end territory\u2014 but rarely all the way to zero.<\/span><\/p>\n

The report underscores some of the cascading effects of private equity\u2019s exit drought. In the U.S., firms\u2019 combined exit volume in the nearly 2\u00bd years since the start of 2023 remains below the 2021 sum alone, according to research provider Pitch-Book Data. By 2023, U.S.<\/span> firms\u2019 median investment hold time had climbed to a record high of seven years, and it remains near the historic peak.<\/span><\/p>\n

U.S. buyout firms held nearly 12,400 unsold companies as of the first quarter of 2025, a seven- to eight-year backlog at the current pace of sales, PitchBook says.<\/span><\/p>\n

Private-equity investors have grappled with the problem of old, struggling investments for years.<\/span><\/p>\n

Selling tail-end stakes on the secondary market is hard, because most buyers want bluechip assets, not old funds full of odds and ends. Continuation funds are a popular way to extend promising assets, but are less viable for those of uncertain or little value.<\/span><\/p>\n

Removing a fund\u2019s general partner and installing a new one to wind down the assets is something more investors are considering now amid the sales slowdown, O\u2019Connor said. It is considered a drastic step, and happens rarely.<\/span><\/p>\n

Often, investors have no better option than to be patient and wait for a sale. But that leaves the question of fees, and how to best motivate managers to sell and wind the fund down.<\/span><\/p>\n

More investors \u201care scrutinizing the fee model\u201d of these late-stage funds, said Runjhun Kudaisya, a partner in the private- funds group at law firm Goodwin Procter. With average fund life\u2014which used to be 10 to 12 years\u2014now stretching toward 15 years, \u201cthere has been a shift in the market\u201d and fund backers increasingly try to negotiate late-stage fees CERTAINLY TIME TO STOP INVESTING WITH THE BIG NAMES. THE ONLY THINGS THEY ARE GOOD AT IS GETTING FEES!<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Deal Drought Adds To Private-Equity Costs Private equity\u2019s three-year deal slump has worsened a longstanding problem: billions of dollars of aging, underwater funds that continue to cost investors money. The slowdown in mergers and acquisitions that began in 2022 has made private equity less profitable and reduced the amount of money firms return to investors. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-695","post","type-post","status-publish","format-standard","hentry","category-business-acquisitions"],"_links":{"self":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts\/695","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/comments?post=695"}],"version-history":[{"count":1,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts\/695\/revisions"}],"predecessor-version":[{"id":696,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/posts\/695\/revisions\/696"}],"wp:attachment":[{"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/media?parent=695"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/categories?post=695"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sterlingcooper.info\/blog\/wp-json\/wp\/v2\/tags?post=695"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}