Key Takeaways
- • JPMorgan Asset Management global market strategist Aaron Hussein argues private equity's recent headwinds (higher rates, slower exits, longer waits for capital) are cyclical, while structural tailwinds from companies staying private longer remain intact.
- • The number of US-listed companies fell more than 30 per cent from the late 1990s, from over 8,000 to fewer than 5,500 today, and the median tech company listed at under six years old in the late 1990s versus 12 years by 2025.
- • Distributions as a share of net asset value fell from a long-run average of 24 per cent to 14 per cent in Q4 2025, per PitchBook, extending the time investors wait for capital back.
- • Private equity exits totaled roughly $1.3tn across about 4,000 companies in 2025, the second-highest year on record, with around 1,400 IPOs announced in the first half of 2026.
- • Lower leverage and cheaper entry multiples in the sub-$1bn segment (25 per cent lower median multiples since 2010) make small- and middle-market buyouts relatively more attractive, though with greater outcome dispersion that elevates the importance of manager selection.
Summary
The private equity industry has faced a difficult cycle. Higher interest rates, particularly after the sharp rise beginning in 2022, raised financing costs for an asset class that relies heavily on leverage. They also widened the gap between buyer and seller price expectations, slowing deal activity and making exits harder. Fewer exits reduced capital returned to investors, which constrained fundraising and left a growing inventory of companies awaiting sale. PitchBook estimates distributions as a percentage of net asset value fell from a long-run average of 24 per cent to 14 per cent in the fourth quarter of 2025, and more than 65 per cent of private equity-backed companies are now held for at least five years.
Aaron Hussein, global market strategist at JPMorgan Asset Management, characterises these headwinds as cyclical and points to signs of recovery. Private equity exit activity improved materially in 2025, with managers exiting around 4,000 companies globally at a combined value of close to $1.3tn. Global M&A reached $4.8tn across more than 50,000 transactions in 2025, and approximately 1,400 IPOs were announced in the first half of 2026, roughly three quarters of the 2025 total. Hussein argues a healthier corporate transaction market should support exits, distributions and the broader recovery.
The structural case rests on companies remaining private for longer. In the US, the number of listed companies has fallen by more than 30 per cent since the late 1990s. Amazon listed in 1997 three years after founding, Google in 2004 at age six, and SpaceX listed in 2026 after 24 years as a private company at a valuation of US$1.77tn. PitchBook counted more than 1,400 active unicorns with a combined valuation of $4.5tn at the start of 2025, compared with 181 in 2016. Hussein notes that since 2020 the average one-year post-IPO return has been -26 per cent, suggesting that public-only access may miss earlier-stage value creation.
Hussein expects the return drivers in the next cycle to differ from the last one, as falling rates contributed heavily to the past decade's returns and are unlikely to repeat. Future returns will depend more on revenue growth, margin improvement, operational efficiency and market expansion. He argues the small- and middle-market is relatively more attractive: since 2010, median acquisition multiples for companies below $1bn have been 25 per cent lower than for those valued between $1bn and $3bn, and acquisition leverage has been 34 per cent lower on average. Smaller firms carry greater dispersion in outcomes, however, so manager selection in sourcing, operational expertise and execution will matter more.
Aaron Hussein, global market strategist at JPMorgan Asset Management, characterises these headwinds as cyclical and points to signs of recovery. Private equity exit activity improved materially in 2025, with managers exiting around 4,000 companies globally at a combined value of close to $1.3tn. Global M&A reached $4.8tn across more than 50,000 transactions in 2025, and approximately 1,400 IPOs were announced in the first half of 2026, roughly three quarters of the 2025 total. Hussein argues a healthier corporate transaction market should support exits, distributions and the broader recovery.
The structural case rests on companies remaining private for longer. In the US, the number of listed companies has fallen by more than 30 per cent since the late 1990s. Amazon listed in 1997 three years after founding, Google in 2004 at age six, and SpaceX listed in 2026 after 24 years as a private company at a valuation of US$1.77tn. PitchBook counted more than 1,400 active unicorns with a combined valuation of $4.5tn at the start of 2025, compared with 181 in 2016. Hussein notes that since 2020 the average one-year post-IPO return has been -26 per cent, suggesting that public-only access may miss earlier-stage value creation.
Hussein expects the return drivers in the next cycle to differ from the last one, as falling rates contributed heavily to the past decade's returns and are unlikely to repeat. Future returns will depend more on revenue growth, margin improvement, operational efficiency and market expansion. He argues the small- and middle-market is relatively more attractive: since 2010, median acquisition multiples for companies below $1bn have been 25 per cent lower than for those valued between $1bn and $3bn, and acquisition leverage has been 34 per cent lower on average. Smaller firms carry greater dispersion in outcomes, however, so manager selection in sourcing, operational expertise and execution will matter more.
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