Private equity — firms that buy whole companies, fix them up, and try to resell them — has a parking problem. As of June 30, these firms held roughly 13,500 U.S. companies. At the current pace of sales, clearing that inventory would take about nine years.
The pitch has always been: buy, improve, sell in three to five years. Yet almost 4,000 of these companies have been held six years or more. Roughly 1,500 have been held nine-plus years. A nine-year holding is not a strategy. It is a car that will not start.
And the money keeps arriving anyway. Investors handed the industry $159.6 billion of fresh cash in the first half of the year. Capital is flowing in the front door faster than companies are leaving through the back.
The 2021 problem
The stickiest part of the jam is the stuff bought at 2021 prices. Only about 1,200 of the 13,500 companies are software firms. But they tie up an outsized share of the money, because so many were bought at boom-era valuations. Insiders now grimly call that vintage the “SaaS-Pocalypse.”
One Raymond James banker put it plainly: the 2021 purchases are the hardest ones to exit, and “there’s a wall of stuff that’s kind of building up.”
There is a bright spot. Sixteen private-equity-backed companies went public in the first half, raising $10.1 billion — the best stretch since 2021. One of them, Bending Spoons, raised $1.68 billion and jumped 40% on its first day. But sixteen exits against 13,500 holdings is a drainpipe on a reservoir.
Guess who they need next
Here is where you come in, whether you asked to or not. The industry’s newest products are “evergreen” and “interval” funds, marketed to regular investors and, increasingly, to retirement accounts.
Translation: if the companies cannot leave, recruit owners who cannot leave either.
We saw the same movie two weeks ago in private credit. Investors asked for $15.6 billion back and got $5.9 billion. An interval fund is the same illiquid building with a nicer lobby. The redemption window — the once-a-quarter chance to take your money out — is a doggy door, and it closes exactly when the crowd shows up.
The only question that matters
Before buying any private wrapper, ask: who buys it back, and when? If the answer involves a queue, a board’s discretion, or the phrase “up to 5% per quarter,” that is not money you can retire on schedule with.
Match liquidity — how fast an investment turns back into cash — to purpose. Money you truly will not touch for a decade might tolerate a private stake. The account funding next year’s groceries cannot.
That is why the Capital Wealth Growth Portfolio stays in things with a live public price: dividend payers, index funds, and short-term Treasuries paying over 4%. A retiree’s sell button has to work every single day.
And be skeptical of solutions that arrive exactly when Wall Street needs buyers. The backlog is their problem. The wrappers are how it becomes yours.