Private equity funds launched during the industry’s 2019 to 2021 boom are unlikely to deliver the returns originally promised to investors, according to a report by the Financial Times citing a number of senior dealmakers and fund executives.
Estimates from five experienced private equity investors and executives suggest that between two-thirds and 90% of funds that began deploying capital during those years could ultimately miss their initial return targets.
The vintage years coincided with exceptionally strong deal activity, as record-low interest rates, abundant financing and optimistic assumptions about corporate growth drove buyout valuations higher. The resulting investments are now being tested by a tougher exit environment and a higher cost of capital.
James Brocklebank, managing partner at Advent, said the exuberance surrounding 2021 in particular had led investors to commit significant amounts of capital at elevated valuations, making it difficult for many funds to achieve their original objectives under current market conditions.
Executives speaking at the IPEM conference in Paris said many managers remain reluctant to sell assets acquired during the boom because doing so could crystallise losses or materially reduce reported returns.
Brocklebank said “very few” funds that began acquiring businesses between 2019 and 2021 were likely to hit their targeted internal rates of return (IRRs). The metric is particularly vulnerable to delays in realising investments because returns are measured according to both the size and timing of distributions.
One senior industry executive expects funds from those vintages to generate average IRRs of only around 7% to 8%. Two other investors anticipate returns in the low double digits, materially below the high-teens net IRRs commonly targeted by buyout funds.
The difficulties are being compounded by a prolonged shortage of exits and distributions. Private equity firms sold approximately $386 billion of portfolio assets during the first half of 2026, according to Bain & Company, but exit activity remained below the level recorded during the same period a year earlier.
Private equity’s distribution drought has now persisted for several years. In 2025, the industry returned less than 15% of net assets to investors for the fourth consecutive year, compared with an average of 25% during the preceding decade.
That is creating tension between limited partners seeking liquidity and managers reluctant to accept lower valuations for portfolio companies.
“Fund investors are clamouring for liquidity, but they are also telling managers they won’t accept a discount to current marks,” said Roger Vincent, founder of Summation Capital and former head of private equity at Cornell University’s endowment. He added that investors could interpret a discount as evidence that portfolio valuations were not reliable.
Apollo Global Management co-president Scott Kleinman offered a more positive assessment of the underlying assets, arguing that companies acquired between 2018 and 2022 were generally strong businesses but were purchased at excessive prices.
He expects earnings growth at those companies to eventually allow sponsors to sell them at reasonable overall valuations and generate a satisfactory multiple on invested capital.
However, Kleinman drew a distinction between the two measures of performance. While funds may ultimately return a respectable multiple of the capital invested, the prolonged holding periods mean their IRRs are likely to remain below the levels initially targeted.
