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Private Equity Is Stuck With 33,575 Unsold Businesses
nytimes.com • • business
Key Points:
- The deal-making boom is underway with major transactions such as SpaceX's record-setting IPO, a $110 billion potential merger between Paramount and Warner Bros, and NextEra Energy's $120 billion acquisition of Dominion Energy.
- Despite the active market, private equity firms are largely inactive in deal-making for the third consecutive year due to difficulties in selling or taking companies public at expected returns.
- Private equity firms currently hold 33,575 unsold companies, a significant increase from 15,923 a decade ago, highlighting a growing backlog in their portfolios.
- This backlog challenges private equity's traditional business model, which relies on buying companies, improving them, and selling within five to seven years for profit, often using significant debt.
