32,000 private companies, $4 trillion in value — all still waiting to be sold

Private equity’s long-awaited exit recovery may finally be taking shape, but KKR & Co. KKR says the headline numbers only tell part of the story.

• KKR shares are under pressure. Why is KKR stock retreating?

In its latest investment outlook, the alternative asset manager said 2025 was the second-best year on record for private equity exits by dollar value. Yet despite the rebound, roughly 32,000 portfolio companies worth nearly $4 trillion remain unsold globally, highlighting how difficult it has become for many buyout firms to monetize investments in a higher-rate environment.

Average holding periods have stretched to nearly seven years, up from the historical norm of five to six years, as sponsors wait for stronger market conditions and improved valuations before selling assets.

Exit Recovery Masks a Growing Backlog

KKR said the rebound in exits has been highly uneven. While overall exit values improved, much of the activity was driven by a limited number of transactions valued above $10 billion.

At the same time, the total number of exits declined year over year, suggesting buyers remain selective and many private equity firms are still holding onto assets rather than accepting lower valuations.

The result is a growing divide between firms that can create value inside their portfolio companies and those that relied more heavily on favorable market conditions to drive returns.

The Buyout Playbook Has Changed

During the era of historically low interest rates, private equity firms benefited from inexpensive financing, expanding valuation multiples and abundant buyer demand. Today, financing costs remain elevated, leverage is more constrained and investors are placing greater emphasis on operational improvements rather than financial engineering.

KKR said achieving the same returns has become significantly more difficult. A decade ago, approximately 5% annual earnings growth over a five-year holding period could support a 2.5-times return on an investment. In today’s market, managers may need closer to 12% annual earnings growth to generate comparable outcomes.

“The buyout math has gotten harder,” the report stated, adding that “asset alpha” — value created through operational improvements — has overtaken “market beta” as the industry’s most important performance driver.

Manager Selection Matters More Than Ever

KKR said the changing environment is widening the gap between private equity’s top performers and the rest of the industry.

Private equity has historically delivered approximately 4% to 5% annualized excess net returns over public equities during the past 25 years. However, those results increasingly depend on selecting the right managers rather than simply gaining exposure to the asset class.

Performance dispersion between top- and bottom-quartile buyout managers now exceeds 1,400 basis points, compared with roughly 300 basis points among active public equity managers.

“The who matters more than the what in private equity,” KKR wrote, pointing to operational capabilities, disciplined capital deployment and sourcing advantages as key differentiators.

Those advantages are already becoming visible in the transaction market. Industry deployment recovered in 2025 to just over $900 billion, according to KKR, but the number of completed transactions declined.

Rather than signaling weaker demand, KKR argues the trend reflects a market increasingly favoring firms with proprietary sourcing networks and conviction. The firm highlighted complex carveouts, take-private transactions and long-standing corporate relationships as examples of deal opportunities that are less dependent on traditional auctions.

Investors Are Concentrating Capital With Proven Winners

The fundraising environment is showing a similar shift. Global buyout fundraising declined more than 15% in 2025, but KKR said institutional investors are increasingly concentrating capital with managers that have demonstrated consistent operational execution and repeatable investment strategies.

The firm pointed to the close of its $23 billion North American buyout fund, the largest in the strategy’s history, as evidence that investors continue backing established platforms despite broader fundraising challenges.

Even as the exit market reopens, KKR believes the industry’s biggest challenge is no longer simply finding buyers — it’s building companies that buyers are willing to pay a premium to own. Until that happens, thousands of portfolio companies are likely to remain in private equity hands despite an improving backdrop for exits.

Photo: Shutterstock

© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

SPONSORED

Retirement can be a difficult part of life to navigate, and a financial advisor can help. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.

This article 32,000 Private Companies, $4 Trillion In Value — All Still Waiting to Be Sold originally appeared on Benzinga.com.