NEW ORLEANS – Private equity has moved from a niche Wall Street strategy to a structural force in the U.S. economy, holding ownership stakes in nearly 13,000 U.S. companies.
Over the past 15 years, the number of U.S. companies under private equity ownership has more than doubled from just over 6,000 in 2010 to nearly 13,000 by the end of 2025. They hold stakes across a wide range of industries, from restaurant chains and hospitals to media platforms and professional sports franchises.
After years of rapid expansion and outsized returns, however, the industry now faces a more difficult capital environment defined by higher borrowing costs and slower exits.
Private Equity: Slower Exits, Softer Returns
For much of the 2000s and 2010s, private equity funds delivered returns that exceeded those of major public stock benchmarks such as the S&P 500. That performance has moderated in the higher interest rate environment that followed the Federal Reserve’s tightening cycle beginning in 2022.
Higher interest rates have increased the cost of leveraged buyouts — the debt-heavy acquisition strategy central to private equity’s model — compressing returns, slowing deal activity and lowering exit valuations. Although private equity-backed company sales rose nearly 5% last year, total proceeds from those transactions fell 21%, reflecting weaker pricing.
From 2022 through the third quarter of 2025, annual returns from a leading private equity index averaged 5.8%, compared with 11.6% for the S&P 500 over the same period, according to data from MSCI, the global investment research and index provider.
Capital Pressures and Regulatory Scrutiny
The slowdown has also affected fundraising, with private equity firms raising 11% less capital last year than in 2024 as institutional investors grew more selective and faced liquidity constraints of their own.
As private credit markets expand alongside traditional buyout activity, regulators have raised public concerns about leverage and the growing ties between private funds and the banking system.
“As private credit assets balloon and grow increasingly entwined with the banking system, it is well worth keeping a close eye on developments here,” Federal Reserve Governor Lisa Cook said Nov. 14 in prepared remarks at Georgetown University.
Even amid weaker returns and regulatory scrutiny, some large transactions are beginning to close. Medline, a private equity-owned medical supplier, completed the largest initial public offering since 2021 late last year, signaling that exit markets may be stabilizing.
Expanding Access to Retirement Capital
Even as institutional fundraising has softened, policymakers are considering ways to broaden the investor base. President Donald Trump recently signed an executive order intended to make it easier for 401(k) retirement plans to allocate funds to private equity strategies.
Opening retirement accounts to private equity would expand the industry’s potential capital base at a time when traditional institutional sources are becoming more cautious.
Supporters argue that broader access would allow workers to participate in an asset class historically limited to pension funds, endowments and other large investors. Critics counter that private equity funds operate with fewer disclosure requirements than public companies and charge management and performance fees that can reduce net returns.
“Private equity invests in companies across the country, helping them grow, create jobs and strengthen communities,” the American Investment Council has said in response to criticism of the industry.
Whether private equity can regain its historical return premium over public markets may determine the pace of future dealmaking — and how deeply private capital becomes embedded in retirement portfolios and the broader financial system.
