Hugh MacArthur discusses the state of the private equity industry, referencing a LinkedIn post from earlier in the year about "cleaning out the private equity attic" of tail-end buyout funds. He reflects on 2025 as a year of liquidity crunch despite initial optimism, with deal numbers and exits down but values up due to larger deals. MacArthur argues that the industry is not fundamentally broken, lacking typical crisis indicators like recession or banking failures. The core issue, he suggests, is the uncertainty surrounding the true valuation of long-held, unrealized assets in GP portfolios, leading to a "prisoner's dilemma" between GPs seeking to maintain attractive marks and LPs needing liquidity. He anticipates a resolution in 2026, with hopes for increased exits at expected valuations, driven by lower interest rates and continued EBITDA growth.
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