Private-Equity Firms Are Sitting on a Nine-Year Backlog

I know you're impatient. You went into that PE deal hoping to be out in 4-5 years. Well strap in; it's going to be a long ride. One that's not particularly profitable...at least for you. Deal with it. Nobody likes a whiner.

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Private-Equity Firms Are Sitting on a Nine-Year Backlog

Investors’ artificial-intelligence worries weigh on efforts to exit software holdings

By Mark Maurer, WSJ

July 7, 2026 12:09 pm ET

The private-equity industry’s next decade could be a slog.

Buyout firms face a backlog of unsold portfolio companies that is only worsening as investor concerns deepen about artificial intelligence’s impact on the software industry. The firms are expected to take about nine years to clear their logjam at the current pace, according to a PricewaterhouseCoopers analysis of PitchBook data released last month.

About 13,500 U.S. companies sat in private-equity portfolios as of June 30, up from roughly 13,300 at the end of 2025, PitchBook data released Tuesday show. Almost 4,000 companies have been held for six or more years. About 1,500 companies have been held for nine or more years.

Many private-equity firms historically aimed to hold investments for around three to five years, though the time frame has been expanding. That has prompted some impatient investors to shift their money elsewhere.

Private-equity fundraising efforts are on pace with 2025’s muted totals, with the $159.6 billion raised in the year’s first half on track to roughly match last year’s total haul of $308 billion, PitchBook data show. The number of funds raising capital has fallen, as fundraising becomes more concentrated among a small subset of large, established managers.

After bingeing on software firms in 2020 and 2021, many private-equity firms are now stuck holding companies with worsening outlooks and rising debt loads.

While only about 1,200 of the 13,500 companies in private-equity portfolios are in the software sector, according to PitchBook, they tied up an outsize portion of firms’ capital after many were purchased at lofty valuations.

Debts were already beginning to pile up at the software companies before the so-called SaaS-Pocalypse, when concerns over the risk AI poses to the software industry slashed the valuations of comparable publicly traded software companies earlier this year.

Many had taken out loans assuming they would continue growing at the breakneck pace of the pandemic’s remote-work era. Their private-equity owners are now hesitant to sell at significantly lower valuations.

“The 2021 assets are probably the hardest ones to exit right now because of where the valuations were and are,” said Darius Craton, director of private-capital advisory at Raymond James. “There’s a wall of stuff that’s kind of building up that’s going to have to come through.”

Firms have turned to the secondary market and so-called continuation vehicles, which give fund investors an opportunity to cash out while allowing the sponsor to own and manage the asset.

One potential bright spot for the private-equity industry is the IPO market, which is coming back to life after years of dormancy. Private-equity firms took 16 companies public in the first half of the year, raising $10.1 billion, the most in a six-month period since the market cooled at the end of 2021, according to Preqin.

“You need to have an IPO market that is coming back to health because otherwise it feels a little bit like kicking the can down the road,” Craton said.

Many of the notable IPOs this year have involved AI-focused companies or those in the defense sector. There are exceptions: Last week, Bending Spoons, a technology company that bought up brands including AOL, raised $1.68 billion and saw its shares jump 40% in its stock-market debut. Bending Spoons’ model of revamping and retaining businesses has drawn comparisons to both private-equity and software companies.