SerpApi.Org
A record level of private-equity investments are stuck in funds limping along past their intended lifespans.
Often known as zombie funds, these funds are no longer raising money or making new acquisitions, in part because fund managers haven’t been able to sell their remaining assets. The net asset value of U.S. private-equity assets stuck in funds at least a decade old reached an all-time high of $348.5 billion at the end of 2025, according to PitchBook data. That is 3.5 times the amount in 2015 and more than 100 times that of 2005.
The slowdown in private-equity sales has fueled frustration among investors eager to cash out. Many managers of funds launched in the mid-to-late 2010s struck deals for their existing portfolio companies at the peak of the market in 2020 and 2021, when interest rates were nearly zero. Buyers are now unwilling to pay peak prices at higher borrowing rates, leaving those funds stranded past their typical lifespans.
“In some cases, it’s three guys and a Labrador running the last few assets of the fund,” said Finbarr O’Connor, chief investment officer and founding partner at Treo Asset Management, an outsourced manager for zombie funds.
Some institutional investors haven’t been able to make new investments with their assets tied up in aging funds. The liquidity crunch is especially painful for pension funds and insurance companies that need to meet payout obligations to retirees. The rise of zombie funds could lead to more institutional and high-net-worth investors reducing their private-equity allocations, O’Connor said.
The billions sitting in funds a decade or more older is just the beginning. A wave of maturing assets in the seven-to-nine-year-old bucket behind them is also rising. The net asset value of those funds reached $512.7 billion in 2025, more than two times that of 2015, PitchBook said.
Many funds that snapped up assets during the height of the dealmaking boom are now confronting a more sober environment.
“A huge number of private-equity funds launched in the last 15 years and it would only make sense that there’s now going to be a culling of the herd,” said Dan Rasmussen, founder of asset manager Verdad Advisers.
Overall, the estimated value of portfolio companies that haven’t been sold totaled $3.91 trillion as of September 2025, locking up 74% of all North American private-equity assets on balance sheets, according to Preqin. That unrealized value has steadily risen from $922.8 billion a decade earlier. Meanwhile, dry powder has grown at a slower pace due in part to fundraising hurdles.
Firms have turned to the secondary market and so-called continuation vehicles, which give investors an opportunity to cash out while allowing the sponsor to hold onto the asset. Sponsors say most continuation vehicles aren’t intended for zombie funds, as many buyers in the secondary market aren’t focused on impaired assets.
Some private-equity sponsors say holding assets longer is often intentional to focus on deep value creation.
Mill City Capital, a private-equity firm based in the Minneapolis area, runs a flagship fund that is 11 years old. The fund has two remaining investments, one of which is on the market to be sold, people familiar with the matter said.
The fund’s holdings include a stake in Horizon Hobby, which makes model trains and radio-controlled planes, cars and boats. The firm has remained an active dealmaker by shifting to an independent sponsor model, raising capital for new acquisitions as recently as 2024.
Argand Partners, based in New York, is still running a buyout fund that is almost 10 years old. The firm said it doesn’t consider it a zombie fund and that it invests in its companies and regularly strikes other deals for special purpose vehicles and co-investments, including the Capezio dancewear brand.
A spokeswoman for Argand said the firm typically holds companies for three to four years, but that it was unable to sell the businesses in that fund because the pandemic and subsequent economic shocks froze the mergers and acquisitions market. “We continue to be optimistic that the M&A market will see a recovery over the next 12 months,” she said.
Francisco Alvarez-Demalde, managing partner of private-equity firm Riverwood Capital, said he isn’t seeing fire sales, or funds selling companies at deep discounts. But he said the industry will likely experience a correction.
“There’s going to be a cleansing between different funds, different assets,” said Alvarez-Demalde, who added that Riverwood is well-positioned. “Some assets will lose in that.”
Write to Mark Maurer at [email protected]
