US Private Equity Exit Value Fell 14.1% in Q3, PitchBook Says

U.S. private equity exit value fell 14.1% year-over-year in Q3, and deal value dropped 13.6%, according to PitchBook data. The numbers confirm what the industry has heard for three straight years: the recovery keeps getting postponed.

Kyle Walters, analyst at PitchBook, put the cycle bluntly: "You hear it every year now. You heard it in 2023, where private equity said: 'It could come back this year.' Then, you get to 2024, and 2024 is going to be a different year. Then, you get to 2025 and 2025 was a bit better, and people say 'maybe this is the year.'"

The asset class—more than $3 trillion in assets under management—remains caught between geopolitical uncertainty, possible rate hikes, and a rapidly concentrating market with limited exits. Fortune's Allie Garfinkle describes it as a Groundhog Day loop for the buyout industry.

How bad is the slowdown?

The clearest signal is in AUM growth. "AUM for the asset class isn't growing nearly like it used to," said Walters. "A 12% annual growth rate over the last ten, 15 years. We're closer to half that now… This is the new norm, putting capital to work with headwinds in the market, and bringing companies to market with unresolved issues."

In other words, an asset class that compounded at roughly 12% a year for over a decade is now expanding at close to 6%.

Fundraising tells a similar story. Walters said raising capital has "definitely gotten harder over the last 18 to 24 months," and he identified the mechanism: limited exits starve limited partners of cash.

"Part of that is because of limited exits," Walters told Fortune. "If you're not getting distributions from your GPs, you have less capital to deploy, so you have to concentrate on fewer managers. That's what we're seeing take shape. But that's not to say there are fewer managers raising capital. It's that fewer managers are crossing the finish line, they're fighting over scraps of the fundraising pie."

Who is still winning?

The squeeze does not apply evenly. The largest firms keep raising at scale. KKR hit its $300 billion fundraising goal in 30 months—ahead of the three-year timeline originally set for the campaign.

That divide—giant managers crossing the finish line while mid-tier firms fight for scraps—defines the current market structure.

What happens if rates rise again?

A further interest rate hike, possibly before the end of the year, is the main swing factor for Q4. Walters said the industry has largely priced it in.

"[If there's a rate hike] instead of some gradual recovery I've been imagining, you probably get a Q4 that looks a lot like Q3," said Walters. "That's not bad, it's not at 2025 levels but still above the doldrums you saw in 2022 and 2023 where activity wasn't really happening at all. PE has penciled a lot of this in, so they've kind of broadly accepted that there's a rate hike coming. So, if it doesn't, it's a pleasant surprise. You'll still see transactions take place—it's just not going to be at the scale we hoped for coming into the year."

The base case, then, is a Q4 that repeats Q3: above the dead zones of 2022 and 2023, but below 2025's levels and well short of the recovery firms hoped for entering the year. As the forecast in Groundhog Day goes: "It's going to be cold, it's going to be gray, and it's going to last you the rest of your life."