The conversations at this year's IPEM in Paris converged on a single theme: private equity has entered a phase of selection. Capital is no longer abundant and undifferentiated, and the managers who built their franchises on the assumption that it would remain so are now under visible pressure.
The figures frame the shift. Close to 18,000 private equity funds are currently seeking some $3.3 trillion, yet for every three dollars requested, limited partners are now allocating roughly one (Bain). On some estimates, the United States could lose as many as 4,000 of its 7,000 managers as fundraising thins and so-called zombie funds — vehicles unable to raise successor capital —accumulate.
Where exits have stalled, the industry has turned to engineered liquidity. Continuation funds reached $40.9 billion of deals in the first half of 2025, up roughly 60% year on year and approaching a fifth of all private equity activity (Jefferies). Ardian's $30 billion secondaries raise, the largest of its kind, is the clearest signal of where capital is now flowing. At the same time, the democratisation of private markets is accelerating — through ELTIFs and LTAFs in Europe, and the integration of private assets into 401(k) plans in the United States.
Beneath the headline activity, the market is polarising. The largest managers continue to grow; specialist outperformers thrive; and it is the mid-market generalist, caught between the two, that faces the most acute pressure. The liquidity squeeze is real: exits are stalling, valuations are fragile, and continuation vehicles are too often a stop-gap rather than a resolution.
For private debt, this has two direct consequences.
The first is structural. As fewer equity sponsors are able to deploy, a growing share of transactions is arriving on a sponsorless basis. Private debt is being drawn precisely toward the part of the market that demands the most careful structuring and the closest understanding of the borrower — the part where execution, rather than the availability of capital, determines the outcome.
The second concerns NAV financing, which has become the emergency instrument of choice. Used well, it is a legitimate liquidity tool. Used to defer a reckoning, its prevalence often reveals how far valuations and exit expectations have drifted from realisable value.
The mid-market is not the casualty of this cycle. It remains where the most considered structuring takes place — sponsorless financings, hybrid instruments, and the financing of Europe's real economy and its principal transitions in climate, technology and defence.
The selection now underway is not simply a question of which managers survive. It will shape what private markets look like over the coming decade — and, in particular, the extent to which private debt assumes a role that an over-extended private equity model can no longer play alone.
Laetitia Costa, Founder
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