PRIVATE EQUITY HAS MORE HOUSECLEANING TO DO IN 2026 / THE WALL STREET JOURNAL

Private Equity Has More Housecleaning to Do in 2026

Recent deals boosted optimism for the new year, but firms are still sitting on a glut of portfolio companies

By Ben Glickman

Private-equity firms made progress clearing their shelves of dusty investments this year. 

There is still plenty more to do in 2026.

Firms have been sitting on a glut of unsold companies for years, leaving many of their investors frustrated and making it harder to raise new funds. 

Despite a pickup in broader deal activity this year, the backlog of companies is up from last year.

About 12,900 U.S. companies sat in private-equity portfolios as of Sept. 30, according to PitchBook, up slightly from the end of 2024.

The average hold period—the time between buying and selling—is nearly seven years, down from the 2023 high but still elevated compared with before the pandemic.

Just a few years ago, private-equity firms were spending liberally to snap up companies. 

Then in 2022, interest rates ratcheted higher, making the debt used to fund big buyouts more expensive and effectively ending the buying spree.

Now firms are reluctant to accept meager returns—and lower performance-based compensation for employees—on companies they bought at generous valuations during the boom times.

That is gumming up private-equity’s tried-and-true formula of raising money from investors to buy companies, then flipping them for a profit a few years later. 

Private-equity investors have been sitting on mounds of “dry powder,” or funds committed by investors that haven’t yet been deployed.

Firms in the U.S. were sitting on about $880 billion in undeployed capital as of September, according to accounting and consulting firm PricewaterhouseCoopers. 

That is down from a record $1.3 trillion in December 2024.

A thawing in the deal market helped boost the overall value of global private-equity sales or initial public offerings by more than 40% in 2025 through Dec. 22, according to LSEG.

Some deals this year offered encouraging signs for 2026. 

Medline, the medical-supply company acquired a few years ago by a trio of private-equity firms, this month completed the biggest initial public offering since 2021. 

Earlier in the year, Carlyle Group and Oracle sold U.S.-based chip designer Ampere Computing to SoftBank for $6.5 billion.

Executives generally expect more offloading of older investments in 2026.

A highly-anticipated boom for initial public offerings offers an exit strategy for private-equity firms. 

High-profile private companies, including rocket maker SpaceX and artificial-intelligence startup Anthropic, are among those mulling listings.

“I would be in the camp that we’ve sort of moved from taxi to takeoff as it relates to transaction activity [and] the IPO market,” Blackstone President Jonathan Gray said at the Goldman Sachs financial services conference.