Business · Companies · 4 hrs ago
Private markets firms face a rise in ‘zombies’ unable to raise new funds
The number of active private markets firms has started to fall, after peaking about 18 months ago, Arctos CEO Ian Charles says.
Firms are becoming “zombies” when they cannot raise another fund, and Charles says more are leaving the active list than new firms are joining it.
About 57% of buyout capital raised from 2018 to 2023 is in a danger zone where funds may not earn carried interest, a share of profits paid to dealmakers when investments perform well.
This points to a difficult market for firms that struggle to deliver returns and satisfy investors and other stakeholders.
Strong firms still have an opportunity to raise money, and Charles expects this year to rank among the best five or six for total fundraising.
Arctos says it has completed eight full or partial exits in the past 12 months, returning almost $1 billion to investors.
The number of active private markets firms peaked 18 months ago and has since started to decline, according to Arctos Partners CEO Ian Charles.
More firms are becoming “zombies” because they cannot raise their next fund, Charles said.
Arctos’s database of firms that raised money in the last seven years has started to contract for the first time.
Of about $3 trillion raised globally for buyout funds between 2018 and 2023, 57% is in funds in a “danger zone” for generating carried interest, Charles said.
Charles said fundraising remains attractive for firms able to generate returns for investors.
- Who
- Private markets firms, and Arctos Partners CEO Ian Charles, who described the trend.
- What
- The number of active firms is declining as some cannot raise their next funds and become “zombies.
- When
- The number of firms peaked 18 months before Charles’s October 2026 interview.
- Where
- Charles discussed the trend at the Bloomberg Invest conference in Dallas.
- Why
- More firms are unable to raise their next funds; Charles said firms are moving off the active list into the zombie list faster than new firms are formed.
This story does not have two clearly opposing sides.
About $3 trillion in net asset value was raised globally for buyout funds.
The number of active private markets firms peaked.
Ian Charles said firms were moving from the active list to the zombie list faster than new firms were forming.
- Buyout fund net asset value
- About $3 trillion raised globally between 2018 and 2023
- Funds in the danger zone
- 57% of that capital
- Database coverage
- Firms that raised money in the last seven years
- Firm count peak
- 18 months before the October 2026 report
What people are saying
Firms are rolling off of the active list into the zombie list at a higher rate than new firm formation
For firms that aren’t great, that breakdown in alignment with all of their different stakeholders creates all these challenges
There’s a lot of money being raised for firms that can generate returns for their investors