Private equity payouts to investors have significantly dropped, with firms cashing out only half the usual value of investments in 2024, marking a third consecutive year of declining returns. Rising interest rates since 2022 have hampered deal-making, leading to difficulties in selling assets at favorable prices and creating a $3 trillion backlog of ageing deals. 

Innovative approaches like continuation funds, where firms sell stakes between their own funds, have gained traction but remain a partial solution. Skepticism persists among investors regarding whether firms can achieve valuations close to those recorded during the investment boom of 2021. 

Many assets are now seen as overvalued, with sales often happening at a discount of 10-15% rather than the traditional premium. 

Finsum: With falling rates and expected increases in mergers and acquisitions, private equity could have a strong turnaround in 2025