Key Takeaways
- • U.S. private equity deal value fell 14.1% in Q3, according to PitchBook, as the asset class, with more than $3 trillion in assets under management, continues a low-grade slowdown.
- • PitchBook analyst Kyle Walters said AUM growth has slowed to roughly half the approximately 12% annual rate seen over the prior ten to fifteen years.
- • Fundraising has become markedly harder over the last 18 to 24 months, with limited exits reducing distributions and concentrating capital in fewer managers.
- • KKR reached its $300 billion fundraising goal, but the raise took 30 months against an original three-year target.
- • Possible interest rate hikes before year-end could push Q4 activity to look similar to Q3, according to Walters.
Summary
U.S. private equity deal value declined 14.1% in the third quarter, according to PitchBook, extending a slowdown that has persisted for several years. The asset class, which manages more than $3 trillion in assets, has been constrained by geopolitical uncertainty and the prospect of further interest rate increases, as reported by Fortune.
PitchBook analyst Kyle Walters described the pattern as a recurring cycle in which managers forecast a rebound each year without it materializing. He noted that assets under management are no longer growing at the pace they once did. Walters cited a historical annual AUM growth rate of about 12% over the past ten to fifteen years, adding that current growth is closer to half that level. He characterized this as "the new norm," with firms deploying capital and bringing companies to market amid market headwinds and unresolved issues.
Fundraising has become especially difficult, according to Walters, who said it has "definitely gotten harder over the last 18 to 24 months." He linked this to limited exits: when general partners return fewer distributions, limited partners have less capital to commit, so they concentrate on fewer managers. Walters said fewer managers are not necessarily raising capital, but that fewer are closing their funds, leaving managers to compete for a constrained pool of commitments.
Larger firms have fared better. Fortune cited KKR, which reached its $300 billion fundraising goal, though the process took 30 months against an original three-year timeline.
Looking ahead, Walters warned that a possible series of rate hikes before year-end could deepen the slowdown. He said that if a hike occurs, the fourth quarter could resemble the third, though he described that outcome as still above the lows of 2022 and 2023, when activity was minimal. He added that the industry has largely priced in a rate increase, so avoiding one would be a positive surprise, and that transactions will continue but below the scale previously expected for 2026.
PitchBook analyst Kyle Walters described the pattern as a recurring cycle in which managers forecast a rebound each year without it materializing. He noted that assets under management are no longer growing at the pace they once did. Walters cited a historical annual AUM growth rate of about 12% over the past ten to fifteen years, adding that current growth is closer to half that level. He characterized this as "the new norm," with firms deploying capital and bringing companies to market amid market headwinds and unresolved issues.
Fundraising has become especially difficult, according to Walters, who said it has "definitely gotten harder over the last 18 to 24 months." He linked this to limited exits: when general partners return fewer distributions, limited partners have less capital to commit, so they concentrate on fewer managers. Walters said fewer managers are not necessarily raising capital, but that fewer are closing their funds, leaving managers to compete for a constrained pool of commitments.
Larger firms have fared better. Fortune cited KKR, which reached its $300 billion fundraising goal, though the process took 30 months against an original three-year timeline.
Looking ahead, Walters warned that a possible series of rate hikes before year-end could deepen the slowdown. He said that if a hike occurs, the fourth quarter could resemble the third, though he described that outcome as still above the lows of 2022 and 2023, when activity was minimal. He added that the industry has largely priced in a rate increase, so avoiding one would be a positive surprise, and that transactions will continue but below the scale previously expected for 2026.
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