Private Equity Faces Prolonged Struggles Amid Tariff Turmoil

The private equity (PE) industry is experiencing its worst performance since the 2008 financial crisis, with returns to investors declining for the fourth consecutive year. According to a report from Bain & Co., PE firms distributed only 14% of their net asset value (NAV) to investors in 2025, a significant drop from 32% in 2021. This prolonged slump has resulted in a record $3.8 trillion in unsold assets, complicating fundraising efforts for new funds. The report highlights that the current situation is worse than the aftermath of the 2008 crisis, where returns rebounded within two years.

The Telegraph - UK

The downturn has been exacerbated by the uncertainty stemming from former President Donald Trump’s “Liberation Day” tariffs, which disrupted dealmaking and contributed to a liquidity crunch. The tariffs halted many transactions and sent shockwaves through the stock market, making it difficult for PE firms to buy and sell companies amid rising interest rates and increased financing costs. The total number of private equity sales fell by 2% to 1,570 in 2025, indicating a challenging environment for exits.

The Telegraph - UK

Despite the overall decline in returns, the total value of PE deals rose by 44% from 2024, reaching $904 billion, driven by significant merger and acquisition activity. Notable transactions included a $56.6 billion deal for Electronic Arts led by Saudi Arabia’s Public Investment Fund and the record initial public offering of medical supply giant Medline on the Nasdaq. These high-profile deals suggest a rekindled appetite for large transactions, although the overall number of deals remains subdued.

Private equity run of barren returns worse than in run-up to 2008

Industry experts express concern over the reliance on continuation vehicles, which allow investors to roll into new funds while receiving some cash back. Critics argue that this strategy may lead to stagnating returns, as funds hold onto assets longer in hopes of improving their value. The Bain report cautions that the rate of return for buyout funds tends to stagnate around the seventh year, raising questions about the long-term viability of current strategies.

Private equity run of barren returns worse than in run-up to 2008

Bain & Co. emphasizes that while the immediate outlook for private equity remains challenging, there are signs of potential recovery. The report notes that barring any significant economic shocks, conditions may improve for deal and exit activity in 2026. Rebecca Burack, head of global private practice at Bain, maintains that private equity still offers diversification benefits, despite being "a little stuck" at present.

The Telegraph - UK

• “The immediate use case for AI application is across areas with large amounts of repetitive tasks that are largely hand-done or highly exposed to software engineering,” — Tim Kiely, Head of Data, Analytics and AI at BayPine

Private Equity Returns Hit 17-Year Low Amid Tariff Troubles

• “Not everybody is feeling like it was a great year,” — Rebecca Burack, Head of Global Private Practice at Bain

Private Equity Returns Hit 17-Year Low Amid Tariff Troubles

While Bain & Co. reports a significant decline in distributions, other sources indicate that the value of exits has risen sharply, suggesting a complex landscape where some firms may be performing better than others. The discrepancy in reported performance metrics highlights the varied experiences within the private equity sector.

The Telegraph - UK