Exit Strategizing: Private Equity Carries Record Backlog of Companies into 2026

Core Insights - The private equity industry is facing significant challenges, with a backlog of at least 31,000 companies valued at $3.7 trillion, surpassing last year's record backlog of 29,000 companies valued at $3.6 trillion [2] - Many private equity firms are struggling to find profitable exits for their investments, with some firms unable to sell companies at acceptable prices and others stuck with non-performing "zombie companies" [3] - Despite current difficulties, there are optimistic forecasts for the private equity market, with predictions of improved dealmaking and the influence of artificial intelligence on investment opportunities [4][6] Industry Backlog - The private equity sector is currently sitting on a backlog of 31,000 companies valued at $3.7 trillion, indicating a growing challenge for firms to manage their investments effectively [2] - This backlog is an increase from the previous year, which had 29,000 companies valued at $3.6 trillion, highlighting a trend of increasing investment stagnation [2] Exit Challenges - Private equity firms are experiencing difficulties in exiting their investments, with specific examples such as Thoma Bravo's inability to sell J.D. Power and ConnectWise at acceptable prices [3] - Roark Capital has also faced challenges in moving forward with an IPO for Inspire Brands, the parent company of Dunkin' [3] - The presence of "zombie companies" that are neither growing nor attracting buyers adds to the exit challenges faced by private equity firms [3] Future Outlook - Analysts predict a potential recovery in the private equity market, with Goldman Sachs CFO noting improvements in dealmaking and the emergence of "jumbo" deals [6] - The private market outlook for 2026 suggests a "new phase of measured momentum," with platform buyouts expected to account for at least 25% of total private equity deal activity [6] - The integration of artificial intelligence in portfolio companies is seen as a key factor that could enhance the attractiveness of tech-enabled mid-market businesses for private equity investment [4]