Big Take How Private Equity Lost Its Mojo
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Sep 22, 2025 In this discussion, Allison McNeely, a private equity reporter at Bloomberg, delves into the current slump facing the private equity industry. She highlights the challenges of fewer deals, long waits for returns, and ongoing fundraising struggles. Allison explains how rising debt costs and frustrated limited partners contribute to the slowdown. The conversation also explores potential solutions, including the impact of 401(k) access on capital flow and how firms may need to rethink their strategies for recovery.
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PE Relies On Cheap Debt
- Private equity's business model depends heavily on cheap borrowing to scale deals and funds quickly.
- Rising rates and a slowing deal market have produced a historic industry slump that a single rate cut won't fix.
DPI Replaces Fancy Returns
- Investors now focus on DPI (distributions to paid-in capital) to judge whether funds actually return cash.
- Many firms are struggling to meet prior multi-dollar return expectations, prompting scrutiny of PE's value.
Insight Partners' Downsized Raise
- Insight Partners aimed for a $20 billion fund but closed around $11.5 billion after revising targets amid a tougher deal environment.
- The firm publicly emphasized returning capital and acknowledged earlier rapid investing during the boom.