Private equity now controls more than 29,000 companies globally, representing $3.6 trillion in unrealized value which is an all-time high, according to Bain & Company. It’s a stunning indicator of both the industry’s scale and its mounting pressure points.
For PE firms, this growth is both a triumph and a challenge. Aging portfolios, constrained liquidity, and complex macroeconomic headwinds are testing even the most sophisticated GPs. The question is no longer whether private equity will remain a dominant force. It’s whether firms can adapt fast enough to convert their scale into realized value for LPs in a timeframe that maintains targeted IRR and MOIC.
The Pressure Beneath the Surface
This record portfolio size isn’t simply the result of strong dealmaking. It reflects a strategic bottleneck. More than 46% of unsold assets have lingered in portfolios beyond four years, signaling a growing backlog. Many were acquired at peak valuations during a low-rate era and now face limited exit options. Meanwhile, distributions to LPs are falling behind historical benchmarks, leaving many investors cash-flow negative. As reported by the Wall Street Journal, the industry is facing a “perfect storm” of high interest rates, geopolitical tensions, and trade uncertainty. All of which are constraining exits and prolonging hold periods.
At the same time, general partners are navigating the operational complexity of managing thousands of portfolio companies, each with unique challenges and varying levels of performance. DPI is under scrutiny, fundraising cycles are tightening and LPs are demanding more liquidity faster.
Creative Solutions, Complex Tradeoffs
To generate liquidity, firms are turning to tools like continuation vehicles, minority stake sales, and NAV loans. These mechanisms unlocked an estimated $360 billion in 2024 — but not without controversy. While continuation vehicles provide breathing room, LPs remain divided on NAV financing, especially when returns feel more engineered than earned.
The rebound in dealmaking offers some hope: global buyout activity grew 34% year-over-year. However, fundraising continues to lag and competition from sovereign wealth and private capital is reshaping capital access. Execution risk is rising even as dry powder climbs past $1.2 trillion.
A New Playbook for Value Creation
Against this backdrop, the top firms will be those that rethink how they manage, measure, and monetize value across their portfolios. That means taking action in five key areas:
- Operational Precision:
PE firms can no longer rely on multiple expansion alone. They must create value through operational performance SG&A reduction, procurement savings and tech-driven revenue lifts. - Exit Readiness:
High-quality assets need to be prepped for exit with clean financials, compelling narratives, and real EBITDA gains, not assumptions. Preparing for strategic sales, stake monetization, or refinancing starts years before the transaction. - Portfolio Intelligence:
Visibility across holdings is essential. Leading firms are investing in portfolio monitoring tools, integrated dashboards, and predictive analytics to prioritize resources and unlock underperforming assets. - Macroeconomic Agility:
Tariffs, rates, and geopolitical shocks now shape strategy. Scenario planning and stress testing, once quarterly exercises, are becoming weekly imperatives. - Leadership at the Edge:
As portfolios age, they need fresh operating talent. Interim CFOs, sales leaders, and transformation experts can inject necessary momentum, especially when paired with a focused value-creation plan.
How E78 Helps Private Equity Compete at Scale
We’ve built E78 with a PE mindset around value creation – partnering with sponsors and portfolio company executives to deliver results across deal execution, financial governance, operational improvements, cost reduction, and revenue growth
Whether we’re supporting deal integration, finance and/or technology transformation, cost optimization, or organic growth strategies, E78 helps portfolio companies expand margins and accelerate EBITDA growth. We focus on practical changes that improve performance—so sponsors can convert backlog into DPI and maximize exit value, faster.
E78 isn’t about offering more services. We’re about delivering better results at the pace private equity demands.
The Path Forward
Private equity firms that excel in driving operational efficiency, optimizing costs, and fostering growth across their portfolio companies are strategically positioned to achieve superior investment realizations, efficiently return capital to investors, and successfully raise new funds, thereby capturing a greater share of institutional capital allocations. Waiting isn’t a strategy. It’s a liability. In a crowded, capital-constrained market, only those who act now will convert portfolio scale into value realized.
