Carlyle, Goldman Spot Dollar Signs in Private Equity’s Liquidity Logjam

Why is a skateboard a better investment in 2025 than private equity? Because you can flip it.

A sluggish PE market this year, held back in the second quarter by tariff-induced uncertainty, has left some buyout firms in a bind when it comes to returning cash to their investors. Nevertheless, alternative assets giant Carlyle and investment bank Goldman Sachs have come up with some Tony Hawk-worthy tricks to make the best of the moment.

Settle for a Haircut

Last year marked the first time since Bain & Co. started tracking data in 2005 that the private equity industry shrank, with assets under management declining 2% to $4.7 trillion. A slowdown in the sector left investors, who saw a $3 trillion backlog of aging, unsold stakes, wary. While many PE firms are under pressure to convert those stakes into liquidity in time for the approaching maturity dates of their funds, options for exits have stalled. IPOs in the US remain relatively subdued, according to EY, well off their 2021 peak. And the M&A market is similarly muted, with global dealmaking down 9% year-over-year in the first half of 2025, according to PwC.

This is not to say extra-motivated PE firms haven’t found ways to exit. EY said there were 215 “significant exit transactions” in the first half of the year worth $308 billion, the most in the PE sector since the first half of 2022. But a lot of those stakes were ditched amid a newfound willingness to accept a loss: 40% of buyout shops told EY they’re willing to absorb a 5% to 10% haircut on long-held assets, while another 24% said they’d take a 10% to 20% haircut. Not everyone is feeling the heat, though, as two Wall Street giants are positioning themselves to capitalize on the logjam:

• PE and alternative assets giant Carlyle Group said Thursday that it raised $20 billion for a new fund that will buy aging private equity stakes off investors at a discount. The secondaries fund will be housed in Carlyle’s AlpInvest Unit and succeeds an $8 billion fund closed in 2020, when the secondary PE market was smaller.
• At the same time, investment bank Goldman Sachs has been pitching a $15 billion new iteration of its flagship secondaries fund to investors, Bloomberg reported Wednesday. It’s also planning a $10 billion fund that offers so-called hybrid capital, or a mix of debt and equity that can finance companies owned by PE shops, which can pass the cash on to their parents via dividends. 

Take It From the Expert: In an interview with the Capital Allocators podcast earlier this summer, Bain private equity chair Hugh MacArthur called the liquidity issues facing the PE industry right now “unprecedented” and cautioned that it’s an overlooked problem. “In many ways, it’s not fully appreciated because we’re not in some global recession, there aren’t asset bubbles that have burst,” he said. He warned that there are roughly 15,000 companies currently held in buyout portfolios that correspond to “$1.8 trillion worth of value that LPs are kind of expecting to see back really, really soon.” The total exit volume of the entire buyout world last year, he noted, was $600 billion, meaning the logjam amounts to three years worth of exits.