Dry Powder: The Private Equity Podcast Nothing Is Fundamentally Broken … Yet Again
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Dec 16, 2025 The discussion kicks off with the idea of cleaning out the ‘PE attic’ filled with outdated funds. A snapshot of the market reveals fewer deals but rising values, with larger transactions driving growth. The host argues that current market distortions are cyclical, not structural, and supports a positive outlook for ongoing deals. Concerns about overvalued long-held assets among LPs are addressed, highlighting a timing dilemma for GPs. The conversation ends with optimism for 2026, predicting a rebound in exits and fundraising.
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Fewer Deals, Bigger Deal Values
- The 2025 market showed fewer deals and exits but higher values because larger transactions closed.
- Hugh MacArthur argues the underlying data says the market can still do business despite mixed activity.
No Macro Collapse Behind The Crunch
- Nothing fundamental in the macro environment broke in 2025: no recession, housing crisis, or widespread bank failures.
- MacArthur emphasizes that typical crisis drivers are absent, making this distortion cyclical not structural.
Capital Still Available; Private Credit Expanded
- Key crisis symptoms—collapsed asset prices, lack of equity, or broken banking—did not occur in 2025.
- Private credit grew to about $2 trillion, supplementing bank credit and keeping capital available.