Active Private Markets Firms Contract for First Time
Business owners should assess capital partner stability as funds struggle to generate returns and firm counts decline.
Updated on Oct. 27, 2026 in Corporate Finance
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For the first time in history, the number of active private markets firms is contracting, marking a shift from the peak seen in April 2025. This contraction forces operators and investors to reassess capital deployment as firms increasingly struggle to secure follow-on funding.
Why it matters
The decline stems from an inability to generate carried interest, creating a divide between fund managers and stakeholders. This consolidation signals potential liquidity constraints for companies reliant on private equity support.
Global buyout funds raised $3 trillion in net asset value between 2018 and 2023, yet 57% of this capital currently sits in funds failing to generate carried interest. Active firm counts are now declining after hitting an all-time peak in April 2025.
The players
Arctos
A private markets firm specializing in sports team investments that manages stakes in four National Football League teams.
Atlanta Falcons
A professional American football team that finalized an acquisition of a 10% equity stake by Arctos in early 2026.
The details
Firms are entering a 'zombie' phase when they fail to raise subsequent funds, effectively exiting the market as they wind down without new capital. This failure is largely driven by a lack of profit generation on invested capital, creating a structural mismatch between firm operating costs and stakeholder return expectations. Conversely, some active managers like Arctos are pursuing exits to maintain liquidity, completing eight full or partial exits and returning $1 billion to investors over the last year.
Timeline
2018-2023: Global buyout funds raised $3 trillion in net asset value.
April 2025: The count of active private markets firms reached its historical peak.
October 2026: The Arctos CEO addressed industry trends at Bloomberg Invest in Dallas.
Market Landscape
This decline in active firms marks the first historical contraction after a decade defined by the rapid growth of the global private equity buyout market. The shift signals a transition from an era of unlimited capital expansion to one of consolidation and performance-based survival.
Operators should review their capital partners' current fund performance to determine if their sponsors face 'zombie' risks or liquidity pressure. Expect fewer, more selective funding rounds as firms focus on generating carried interest rather than new capital accumulation.
The takeaway
The era of unchecked private market expansion is closing as firms face the hard reality of stagnant returns on $3 trillion in capital. Business leaders should monitor the carried interest performance of their equity partners to assess the risk of funding interruptions in the coming quarters.
Further reading
Learn more about capital strategy at Corporate Finance.
Source note: This article includes information reported by Mint.
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