|
Private equity funds are holding on to their assets longer than ever, leading to a rise in the number of so-called “zombie funds,” according to PitchBook research.
At the end of 2025, roughly 40% of PE-backed companies in the US, representing more than $860 billion in net asset value, had been held for seven years or longer, according to Private Equity’s Zombie Problem.
For limited partners, this exacerbates a longstanding lack of liquidity in their PE portfolios and adds to building frustration about the gap between how assets are marked and what they can sell for. But it also creates opportunities in the secondary market that LPs could exploit as sellers or buyers.
These PE zombie funds are operational and solvent, but hold companies that lack a clear path to a timely exit and a targeted return.
The dearth of exit options is driving the secondary market’s sell-side pipeline. Because private equity portfolios rely on distributions from mature assets to fund new capital calls, LPs who are not receiving the cash flow they had modeled are increasingly generating liquidity through secondary sales.
Hamza Khaldi, a principal at placement agent and advisory firm Elm Capital, said stakes in funds eight years or older are typically transacting at 35% to 45% discounts to their NAV. Less mature funds can trade close to par or even at a premium. |
