Another False Start: PitchBook's H1 2026 Private Equity Data (w/ Steven Buibish)

0:00This is what's breaking people's brain, Steven. So you're going to have to help people sort through this. How can we be paying 2021 prices for deals in the middle of all this going on now? Yeah, that's one of the biggest, like you said, kind of conundrums in the market today. So what you're seeing in the prices is that it's only those high quality assets that are changing hands. And everything else is sort of stuff.

0:30up your host, Devin and Jim. Welcome back to the Funcast, everybody. We have a banger for you today where we're going to go deep into the data from Q1 and Q2. So first half of 2026, what's going on in private equity. And I've got my new friend and the man with the data, Stephen Bowie-Bish, CFA, who's the director of U.S. private equity research for PitchBook, a close friend of the firm and our data provider for all these things. So he's got all the data. They have a new relationship with Stepstone. So now they're getting portfolio level data, which if you've seen a lot of their stuff recently, it's been like super enriched by the Stepstone relationship, which I think is a great partnership and very helpful for us as we try and dig through things.

1:17So yeah, one, first of all, congrats on the CFA. I failed CFA level one when I was an equity research analyst and I was like, oh, I'm got to get out of here. I'm going to get into private equity where I don't have to take any of these exams. Like if you put MBA after your name, that doesn't count. PhD, yes. RN, yes, because my mom was a nurse. CFA, you get to put after your last name because that actually, you earned that thing. So welcome to the pod, first time guest, but you will be a repeat champion, I'm sure. Stephen, welcome. Awesome. Thanks, Devin. Glad to be here. I think the blessing and a curse to pass level one, right?

1:51Because Once you pass, you feel like you're stuck in. You got to make it through. But, you know, it's great to be here and glad, you know, looking forward to getting into the numbers. Yeah. So let's jump right in. You guys came out with your kind of first half report. You guys come out with Corolline Reports. This is the first half U.S. report. We're going to focus on U.S. We may do global stuff if the audience wants to hear about it. But let's kick it off. The title of it is Another False Start. Here we are in 2026. So why don't you tell everybody kind of the headlines, what the big picture is, and then we're going to kind of dive into the segments of private equity and then we'll touch fundraising at the end here.

2:26So what happened here? End of 2025, I think everybody in the industry is feeling pretty good, especially on the larger end, mega deals, mega deal frenzy last year, the driving deal activity to new highs. Everybody came into 2026 with a pretty optimistic view of what was going to happen. We were going to get exits. We were going to get this year of the IPO. And then you sort of had this cascade starting in Q1, SaaSpocalypse, which I know you're really close to, and then more Iran, inflation spike, people started to get a little bit more hesitant on expecting a rate cut. And I think that just caused a bit of a pause for the industry.

3:11People thinking, how do we price assets in this volatile environment? We don't know what's going to happen with software, which has been our anchor allocation for the past 15, 20 years. We don't know where rates are going. And we saw that in the deal value in Q2 especially, which was down 38 % from Q1. And a lot of that is driven by mega deals essentially falling off a cliff. The rest of the market pretty flat, but mega deals were down quite a bit. Yeah. So let's look at chart one. And so we're going to have some fun here and pull up charts. So if you're watching this on video, you know, Apple and Spotify let you do that now and certainly on the YouTube channel.

3:53So we'll pull up the first chart in this report, which really shows that mega deal percentage of Q2, right, as a massive percentage of the total. Smaller in terms of number, but really dwarfing it. And if you look at the prior quarters, Q3, like you said, Q325 was a very good quarter. I think everybody thought like, OK, here we go. we're ramping up to a great back end of the year and then a kickoff to 2026 that didn't materialize again 25 everybody thought we're going to rip here comes the dpi and then we had liberation day and tariffs and confusion and then same thing heading into to this year we had uh claude code came out our claude co-work came out and everybody freaked out a little bit about that and then we you know started dropping bombs uh and uh oil shock etc etc um but yeah this chart clearly mega deals are making up a much bigger percentage of the total deal value and kind of dwarfing everything else.

4:48Is that what you guys are seeing? And was this just a couple of big whoppers? Do you remember which ones these were or what was going on there? Yeah. So late 2025, you had the EA take private, for example, was a big one. But I think looking at this chart, you can see that even last year, maybe the headline numbers were a little obfuscated the picture a little bit right we felt like that in the entire industry was growing but really it was those mega deals 84 percent of the run-up from trough in 2024 to the peak in 2025 that we see here was driven by mega deal and so now that that's fallen away kind of feel like the entire industry is down but most of the the sub two and half billion dollar deal category has been pretty stable for the past two years.

5:39I think as the industry, we need that to get better and to improve and for more assets to change hands in that segment of the market. But I think it is a good reminder that the headline stats don't necessarily always tell the full picture of the health of the industry and deal activity underneath. Yeah. And while Q125 was pretty good, like everybody thought we're ready to rip here, right? $282 billion, it looks like here from the chart, in deal value, now 142, kind of given that drop from year over year looks. But we kind of shook it off last year. I think the question you and I have here is, is this year going to shake it off?

6:25Well, I'll give you my answer. I don't think we're shaking this off anytime soon. So I don't think you're going to see that spike into the back end of the year coming out into Q3 and Q4. And we're recording this in middle of July. Nothing has started ripping in the summer. In fact, it feels eerily quiet. How about we jump into chart number two, which is really kind of this AI is on two clocks, you guys say it. So like tech down, energy up. So walk us through. I don't know energy deals at all other than we see some software deals from time to time in the energy space. But like what happened does he unpack some of like where the money was going in terms of sectors?

7:00Yeah. So as you mentioned, software, first half of this year versus the first half of the prior year is down 28%. In Q2 alone, it was down over 60 % versus Q1. So you saw deal activity in software freeze up. And I think that goes back to what we just talked about. everybody's sort of uncertain about how am I going to underwrite a software deal and it's great to get your perspective on that as well and then one of the things that we're looking at is okay if software you know the software dead we don't think so but it's obviously not the steady deployment engine that it has been for private equity over the past you know decade plus where is that money going to go now and we're seeing it in the physical assets so you probably heard the halo trend that has been coined.

7:52So hard assets, and we're seeing a big spike in energy. And other as well. Hard assets, Halo, hard assets, low obsolescence. Low obsolescence, exactly. That was a great trade. Especially around the data center build-out. Yeah, great trade until the oil shock for a lot of people. But yes, data centers are propping a lot of that up. All right, so what are you seeing in the data here on this Halo trade that may be taking effect? And I'll answer your question on where I think software is at the moment and where it's headed. Yeah, so we're seeing a big uptick in activity and this is just energy, but then also you think about the other sectors in construction and engineering around the data center build out and infrastructure more broadly, but I think specifically data centers in this moment right now.

8:38And so it represents a different playbook than what private equity is writ large has followed for the past 10 plus years. And I think it's going to be interesting to see how that shakes out, who are the winners and losers, who has the expertise to make that pivot and have the talent to source deals and improve companies in those specific sectors. I think one of the big points is prices didn't change. This is the challenge is like a volume fell, right? Value fell, but prices stayed the same. And that'll play into my software view here, but talk everybody through that. Like we're at, according to the data you guys have with StepZone, we're at the 2021 peak for multiples.

9:22So like, this is what's breaking people's brain, Stephen. So we're going to have to help people sort through this. Like, how can we be paying 2021 prices for deals in the middle of all this going on now? and especially where a lot of deals aren't getting done. So you'd think like, oh, prices adjust because it's tough to get a deal done. In fact, no, the opposite, the deals that are getting done are getting done at historically high prices. Walk people through that. Yeah, that's one of the biggest, like you said, kind of conundrums in the market today is, we have the data to the end of 2025 with Stepstone and we also have our pitch book data, which is a slightly smaller data set that kind of has a more of a real-time view.

10:01And we're seeing the same thing there in 2026 that prices haven't moved down yet. And which is, I think, it's hard to wrap your head around. And a lot of that comes to high quality assets exchanging hands and GPs who are unwilling to sell at lower prices. And we're seeing that on the exit side too, which I'm sure we'll get into, that exits are stalled. And so it's just a bit of a stalemate where it's a who's going to blink first. You know, I think everybody on the exit side, you're waiting for some liquidity to come in. Your buyers are willing to meet your price. And on the deal side, you know, they're digging their heels in as well and saying, you know, we're not going to pay top dollar unless it's a high quality asset.

10:48So what you're seeing in the prices is that it's only those high quality assets that are changing hands and everything else is sort of stuck. And that I think is the big question. it'd be great to get your perspective on is are you feeling that in in the day-to-day when you know you're trying to buy companies and what is going to bring us out of this stalemate uh to to unlock some more growth because i think we need it as an industry to grow is we need people that are willing to at least you know trade assets even if it means you take a slightly lower valuation than what you think the businesses work yeah no all good points uh so the data you're showing is the average US buyout, this is the data you and Stepstone have, is 12 and a half times EBITDA, right?

11:36Which is as high as it was in 2021. I'd say software that probably equates to, you know, maybe six, seven times revenue, you know, five to seven times revenue on average. Now, maybe there were some peakier deals in 2021 in software, but we're still seeing things trade at high single digit, low double digit revenue multiples in software. Here's what we're seeing is that only A assets can trade right now in the software world, I think in general. Your best assets can trade. A B asset doesn't even get a look. So like to take a B asset, meaning a B asset, meaning like a growth is down and maybe retention is down, but it's still good, right?

12:14You're growing 10 or 15 % a year, not 20 or 25. And maybe you're not as profitable as you could be, but you're still profitable. We all know, we've all seen the charts net retention for software companies is down significantly since COVID as people are like, hey, I don't need to buy as much software. Maybe I renew at lower levels. And gross retention is down because logo churn is up a little bit, like I'm losing customers. We're not seeing it from AI. So this is not an AI story. Full stop. Software's challenges right now is not an AI story that AI is replacing software. We agree with you and your corporate institutional view of software.

12:54Software is still one of the greatest business models ever made. The market just doesn't know how to price it right now. And they don't know what AI is coming for and what isn't because it's still too early. I think that story is getting told every day more to the software winning side than just AI winning. I mean, my view is AI is software. AI will be built into software. You won't know if you're using AI or software as just kind of all one thing. but the big public companies need to put up a few quarters for people to get comfortable with that. So if you own a software asset and I, and I own 12 of them and we went to market with one of them in January, one of the better businesses we've ever owned.

13:34And we got a very cool reception from the market, not because they didn't like it. It was because people said like, I can't underwrite this right now. Taking anything to my investment committee in the spring of 20 26 is almost impossible unless it's such a screaming deal. Everybody's like, yes. And of course, we're not going to sell at a screaming deal for a business we feel very comfortable and confident about. That's one. So that's people. I heard yesterday that 60 % of the deals aren't closing that are in the market. 60 % on the software side, meaning you took it to market, people told you the price and you're like, no, no, no, nevermind.

14:16We'd rather hold this for a year or maybe CV it, right? We can get into that later. So people who are testing the market are just saying, no, nevermind. This was, I shouldn't have done this. And then people who are taking things to market with very pretty metrics, you know, 110 net retention, 95 % gross retention, solid double digit growth, profitability in a, you know, vertical market with, you know, maybe some regulatory stuff. Those are still trading at very high multiples. I've heard of assets selling at high buyouts, selling at high teens, revenue multiples, low teens revenue multiples. And somebody has a lot of conviction around it.

14:50And it's not like 10 people bidding on it at that price. It's one outlier bid with somebody with a lot of confidence. I also have my banker friends sold as many companies for 10 times revenue in 2024 and 25 as they did in 2020, 2021, maybe even more so. So it's not like this is a 2021 problem. This valuation issue was ongoing. So I'll pause there and just say, we're seeing it. People are scared to bring anything to market. People were thinking about it have completely pulled back. So there's less product in the market software and anything that's in there, people are looking for a deal. And a lot of people aren't willing to trade at that deal.

15:28Now that is causing the problem we're going to get to in the third act of this is just this stuck thing. But 100%, we feel the data that you guys are publishing for sure. And something has to give. If the numbers are being buoyed by mega deals, those mega deals are raising less debt. So the prices are still high. Debt is less available, which is causing the issue. People can't get the debt to buy the deal to make the model work. But people are paying historically high prices with historically low leverage. So if you think of the vintage of 26 out in the future, there's a lot of pressure on the value creation for something to happen.

16:04But once you wrap up the high level stuff, and then we'll dig into middle market and then fundraising. Yeah, I think on your points, right, on the math is harder to pencil today and you have to have that really high conviction to do these deals. I mean, I was just looking at some data on multiples for mega deals only. and you look at mega deals only they're also at the highs that what people are paying 16 times uh much higher than the average for the rest of the market and if you look at 10 years ago those same mega deals were trading it 10 and a half times or 10.6 times but that's ebda ratio is almost the same so that entire six turns is equity and so yeah the math for a leveraged buyout is much more difficult when you have to contribute that much equity at this high of prices.

16:59And so if you're going to make that bet, you have to have that super high conviction, like you mentioned, of coming in with a really strong bid and saying, I really want to own this asset. And so that lends itself. We said that the better assets trading and everything else is sort of stuck. And we can kind of dig into that a bit more. All right. Now that you've given us the overview on kind of the high level look into the first half of the year. Let's dig into the segment. So my favorite, the middle market, lower middle market. This hasn't been a migration down into the middle market because it has its challenge, but it's a little more stable than the other segments.

17:38So why don't you walk us through what you guys found about middle market? And I think it has something to do with add-ons, let me guess, are one of our favorite things. So yeah, give us a high level there and we'll pull up a slide about that piece of it. But yeah, jump into the middle market here. Yeah, exactly. As you said, we saw it on the first slide, the middle market has been stable, right? I think we would like to see growth, but at the very least, it's been stable. Assets are changing hands. Prices have been stable as well. We've seen, you know, talked about the prices rise. I mean, they are rising faster at the top end of the market than they are in the middle.

18:11So you're seeing a little bit more of, you know, buyers and sellers agreeing on price in the middle market and that being sort of stable and assets clearing, which is good. And to your point on add-ons, that's really become an anchor of the middle market and how capital is deployed. By count, 75 % of deals in private equity total are add-ons. And a lot of those happen in the middle market when you're building platforms. And we've seen a lot of success with that platform models. I'm sure you've seen as well. And it's been one of the primary exit routes for the middle market. And we've seen some really successful exits of smaller middle market firms successfully building high quality platforms.

18:56And then those platforms getting sold at higher valuations to some of these really large sponsors. So you've got what? You've got like 74, 75 % of all buyouts, right? Or add-ons. Yep. That's a staggering number. 75 % are acquisitions, but only about 40 % of the value, right? So again, these are lots of small little tuck-ins. They work really well in services businesses. They work really well sometimes in manufacturing businesses. Software has got into the buy and build game. Healthcare, you know, traditionally, healthcare service has been a very good space for that. Your landscaper, your HVAC, Everybody on Twitter is, you got all the memes about, you know, Harvard MBAs buying HVAC businesses and rolling them up, right?

19:49This is all true and this is happening and this is what you're seeing in the data, right? Pretty stable though over the last several years. It's been about 75%. In fact, like kind of, you know, as you can see on the chart here, like post-COVID, post-add-ons became a very powerful, potent piece of it because obviously deals were stayed elevated expensive. So the way to manage your average or multiple down is to start doing acquisitions. But we did see the deal value go down a little bit now, maybe pop back up. So, yeah, for people who think of like, oh, yeah, a buyout is like you're buying a business.

20:24It's like, no, most of the time, most of these deals, three out of four times, it's actually a tuck into something else. Yeah, I think to your point earlier on, you know, you think you have a very high quality asset and you don't think the price is right. and you want to continue to do some value creation to those assets and continue to build platforms. And so we've seen that activity going. I think what we'd like to see move forward is some of those platforms get sold, new platforms get bought, and you sort of get the cycle going again versus having just ever-expanding platforms that are stuck in the middle market.

21:01Because I think, you know, you and I have discussed this, I think there's probably some platforms that get built that aren't meshed together very well. And I think that causes some of the overhang that we're seeing today. Yeah, certainly in tech. Well, hey, the joke is integration is value creation for the next guy. So for a while there, post-GFC, you could go buy a bunch of businesses, not integrate them very well, have very nice revenue metrics, very nice EBITDA metrics, because you only need one CEO and CFO. So you get a lot of synergy in the G &A line and maybe in the COGS line. And then you'd take it to market.

21:45You get a bunch of bids and somebody say, oh, we could actually integrate all these things and make it really tight and we could get another 10 points of margin. That doesn't work anymore, that game's over. If you don't have a very pretty consolidated asset, it's going to cost you on the price, especially in software, right? When you're buying multiple companies with multiple different technology stacks, different customer databases, maybe different ICPs, maybe not a lot of upsell across those. They look like kind of Frankenstein's monster of software companies. It almost looks like a holding company inside a vertical industry rather than a pure software business, you could get away with that probably until a few years ago.

22:28You can't get away with that anymore. If you're taking that business to market today, you're probably going to get, well, it'll transact, but it will not transact at a premium multiple. And I think a lot of those things were bought at premium multiples to begin with. That's my general view of what's going on on the consolidated side. So a lot of people are saying, hey, let's use AI. Hey, now we need to integrate these things. I'm going to have to own this for a couple more years. Let's get the operating team in there. and make this thing look a lot prettier before we take it to market. And that's slowing down exits on the consolidated software business side.

22:59Sorry, I interrupted you. No, all good. I was just going to say in the next chart we'll show as well, it kind of gives you the math behind why this strategy is so prevalent, right? You said everybody wants to go do an HVAC roll-up is sort of like the joke in the industry circles. And you can see why, right? If you buy a smaller business, it's cheaper than a larger business. And you can arbitrage that. I say arbitrage is air quotes because it's not obviously risk-free. But if you can successfully integrate a bunch of small businesses at 8.8 times EBITDA and sell it at 13, right? That is the playbook and the math.

23:38But to your point, the manager selection is so important in making sure that what people are doing is actually building platforms that somebody else wants to own, right? Because it can't be just as simple as cobble together a bunch of businesses and not integrate them and try to sell them as a holding company. No one's going to pay that higher price. And so I'd be curious to get your thoughts. I wonder if, you know, maybe this is a little bit repetitive, but if some of this overhang that we'll get to later is a result of that sort of behavior of kind of poorly cobbled together platforms? Or is it just a price?

24:14Hey, we paid high prices for this and we're struggling to sell. I'd say yes and yes. One, only because I've been in the business a long time and I've got a lot of friends who run funds with different strategies than mine in different sectors and end markets, is one of the challenges is if you've been buying things over the last five to seven years, you're definitely paying premium multiples for things. That's just kind of where the world was. Debt was cheap and all that. If you're out from under the debt load, which a lot of the issues is companies are just up against some amount of debt and are struggling to pay it.

24:50It's hard to sell a business when you're in covenant default with your lender. So let's take the companies that are healthy, right? That are performing fine, maybe not as well as they were before, because everybody's growth has been cranked down a little bit. And every new piece of revenue is a slog across every industry, maybe not data centers and plumbers and things. but you paid a slightly premium multiple. You didn't get to average down that multiple through M &A, right? Because everything was trading at a pretty similar multiple. Everybody knew they could sell their HVAC business, their landscaping business or their software business at a pretty good price.

25:28It wasn't a surprise. Like you just knew there was enough data out there. And now the challenge is the expectation is you were going to get multiple expansion. And now, as a lot of the data you have, Apollo, a bunch of other people have shown, is that very little value is coming from multiple expansion today, right? It's coming from operational efficiency and revenue growth, a little bit from leverage, a little bit from multiple expansion, but most of it is operational. So if you weren't driving that as tight as maybe you should, you're now not getting the benefit of multiple expansion that you would have maybe five years ago.

26:06So that's a challenge in any business generally. Multiple expansion has dried up as a value, as a driver of returns. On the software side, what's happening, and we've seen this up close because we're doing it and it's being done to us, is that tech diligence is now the first thing that gets done in a process. This has never happened before in the history of private equity is certainly tech. You did tech diligence about halfway or middle of the way through for a B2B vertical SaaS business, right? You're like, hey, they've got a thousand customers. No customers, more than 1 % of revenue. It's growing 15 % a year.

26:41It's got 25 % EBITDA margins, rule of 40. Got a good management team. There's a lot of white space, room to run. We can do add-ons. Oh, let me check the tech. Because you're like, it works. A thousand customers use it and it's critical infrastructure for their business. So it's clearly got to work. It still works. What's happening right now is the first thing anybody does is tech diligence. And they say, okay, sure, it works. And it's a relatively modern stack. Maybe it's not perfect. But any company started before February of 2026 has tech debt. Not only do they have tech debt, they've got operational engineering tech debt, which means the team is unlikely to be making things in an agentic, modern way.

27:25like Anthropic and the best startups do. So any buyer of that business will look at it and say, great, love the market, love the customers, love the revenue diversity, love the margins, love the team. But if I'm going to own this for the next five years, we need to completely rebuild the software factory in the most modern way. And guess what? That's going to cost you X millions of dollars on the price. And that's literally happening first. And the big funds that often the smaller funds are selling up into are doing that to all of us. So all of us are saying, oh, I got to get my engineering team in order before I go bring this to market because I used to do commercial and financial diligence first.

28:04Now they're doing tech diligence. So that is an issue here. But this chart we have up now is, you know, small deals get done at, you know, between eight and nine times EBITDA. Mega deals are getting done at 16, right? So again, counterintuitive, You'd be like, oh, these big deals, there are fewer buyers of these bigger deals. They have more power to negotiate a price. It's in fact, the biggest companies are paying the biggest prices. So I have to draw and the debt, like you said, isn't as available as it used to be. So I have to drive the most operational efficiency in companies that are already pretty optimized.

28:36That is the challenge for these big, big funds is like, where do they find the value? um and i think some of that comes from i think it's it's a more of a macro bet on growth right you're trying to pick you hear a lot of discussion about picking the right neighborhoods the right themes uh and i think that is it's an interesting distinction to make of middle market versus mega funds you know i think they're doing very different things and and to your point the the alpha is going to come you know if you can create it it's going to come likely in different ways There's just less that you can do on some of these really high quality, expensive companies to drive operational efficiency.

29:19But if you make the right bets and you pick the right companies, you can obviously outperform. It's just a very different form of investing than I think what's going on in the middle market. And so I think for, you know, if you're an LP and allocator, it's worth sort of taking that into consideration of like, maybe I shouldn't treat this as a monolithic asset class. And really, there's different pockets that are offering different types of investing and what I want to get exposure to. A hundred percent. The Apollo came out with a great report in January called Back to Basics. It was basically like, hey, private equity, we need to go back to the 80s and 90s, kind of the model of just like you buy a business that needs improvement.

29:57You run the plays. You bring in the team. You make money on the buy. You make money on the build. You make money on the exit, right? Right. And, you know, that's a trillion, a firm with a trillion in assets saying we got to do small deals again. But, you know, hey, they're talking my book. I love it. Let's go to slide five, which is this dispersion, this gap has never been wider. So, you know, we say, yeah, everything's getting more expensive. But like, hey, talk everybody through like what you found in pricing dispersion and kind of why it appears to be increasing. Yeah, it's exactly what you said.

30:32And we hit this a little bit earlier. is just the smaller deals. They are more expensive than they were a decade ago, but they're not as much more expensive as the mega deal. And I think that little bit of both, it points to, I think, supply-demand dynamics that are happening at the top end of the market, right? We'll probably talk about it a little bit later, but the biggest firms are still able to fundraise and they're competing against each other for assets. And when you're at that side, there's only so many assets that trade and a lot of competitive processes. And I think there's a lot of bets that, you know, you can use your scale to really make some of these businesses better.

31:15So we're seeing just that gap just increase between the mega funds and, you know, the middle market. And it really just said anything above and below a billion dollars is a pretty stark difference. And obviously at the lower middle market, it's even more flat and so it just kind of goes back to middle market pretty stable assets are transacting prices are pretty stable and on the mega deal side is where you're really getting these big shifts in price and deal activity quarter to quarter um that's kind of throwing i think some of the headline metrics off a little bit or maybe not telling the whole story of what's going on beneath the surface.

31:59We read in the press what all the big public managers are doing, and we kind of think maybe have a tendency to extrapolate that to the rest of the market, and this has just helped show that very different markets depending on where you're playing. Yeah, so for our LBO geeks out there, I mean, just stare at this chart, right? And you know kind of debt became abundant And, you know, through the whole time of this chart, maybe a couple little blips along the way, but debt was relatively free until relatively recently. You know, we'll see the 26 data here pretty soon, I would imagine. But, I mean, just think if you're buying something for eight times and you're able to put four and a half or five turns of debt on it in a lower middle market deal or middle market deal.

32:46Now you're buying that business and you get three to three and a half turns of debt on it, right? Okay, so yeah, you could probably get through that versus seven or eight times with some structure and some meds and some other things on these mega deals. Now those mega deals may be four to five times. So that gap in financing ability puts so much pressure on value creation that has to come from growth. Certainly can come from running the business better, but these huge companies are all relatively run pretty well, right? Um, uh, there isn't that much juice to squeeze operationally. So you have to drive growth and growth has been hard to come by.

33:27So again, I think, um, and you guys just came out with a note. We'll talk to the team about it in a, in a future episode of, and looking at 2000 to 2021, the biggest deals by the biggest funds saw margin EBITDA margin compression degradation in nine of 21 vintages. So the biggest deals done by the biggest firms, saw EBITDA margins decline in the ownership. Again, back to this, it's hard to drive operational value here if you're not getting the growth. And if that's happening, that's putting even more pressure on the balance sheet. So more to come on that. But I do think, yeah, let's get to the challenge of like there's money that needs to be deployed.

34:11The bunch of stuck companies, 10 funds raised half the private equity allocated last year in 2025. My guess that will continue given that, and 10 LPs allocate a trillion dollars to private equity. So like this is really bifurcating. I wrote a piece called Small is the New Big that kind of made its way around the internet if you want to go to our PE Fundcast substack. And a lot of, I wrote it before a lot of your stuff has recently come out, But I think let's get to some of this data here in the third act. So we're calling it like the overhang and the jammed conveyor belt. So what's going on in fundraising?

34:52What's going on in distributions? Like what are you guys seeing with the StepStone data you have and the data you guys are pulling from the market? Yeah, a lot of this is our pitch book data. It's really pretty stark, right? I think we all know distributions, DPIs is the new buzzword on the street. LPs want distributions. I think they want, if anything, a validation that the marks these assets are being held at or something or a price that someone's willing to transact. They want some cash back so that they can reallocate how they see fit. And so what we've seen is sort of just this sort of the jam, the conveyor belt is sort of jammed where assets aren't coming off.

35:35It's hard to raise new funds. It's hard to then go buy new assets. and we're sort of stuck and we're seeing an aging inventory of, you know, people call it zombie funds or assets that are in zombie funds, where you're thinking assets, seven, 10 years old. Some of those I'm sure are great assets that people want to continue to hold, but it's not, I think a healthy trend for the industry to have assets that kind of get stuck in the system and don't, don't come out. Cause I think it leads to people questioning marks and all sorts of things. So I think one silver lining that we'll get into is that we've been here before.

36:11Yeah, let's pull up chart six and look at like I'll opine on kind of what's going on after you finish here. But we've been here before and chart six shows that, you know, during the GFC, we were way worse than we are today. So why don't you walk us through what you were seeing here on this chart? Yeah, actually, the next year, let's skip ahead of the next chart. It might be an even better visualization. but this one shows the bio nav by age while today we're at record levels of assets that are seven years or older on a relative basis we were at much higher rate post GFC and we had a bit of a glut there as well and I think what's interesting when you look back at that time frame sort of what got us out of there as you can see on this chart it was growth ultimately right it was it was we had new assets come into the industry.

37:04And it wasn't just a dilution of the older assets relative to the size. It's actually the total dollar amount of older assets actually shrank over those few years when you start to see the chart inflect. And I think that gives hope that if we can kick start and have new growth, new assets that come into the system. And then the second ingredient is price. I think prices will eventually need to come down and we can debate forever what's going going to cause that to happen. But prices back then were much lower than they are today, as we've discussed. And so I think if you can get to a good level in price and we start to get growth in assets, which the industry is still growing.

37:47And I think, you know, the evergreen semi-liquid space is actually a new avenue for growth. We saw assets in that space double last year. So from 50 billion to$99 billion in the U.S. alone. That doesn't include some funds that are based offshore that are investing in the U.S. And we expect, or I expect that to continue, that as you get retirement, 401k, target date fund, you'll get more assets coming into private equity through these Evergreen vehicles. And that might be the source of growth that the industry needs. Now, I think one important caveat is that those assets are overwhelmingly going to the top asset managers that have built-out wealth businesses and can offer these sorts of products.

38:33But I do think that that money coming in, that deployment pressure, to be honest, to put that capital to work, could start to bring some assets out of the middle market, then give those GPs dry powder to deploy and bring assets out of the lower middle market and kind of create a flywheel that then can allow the industry to keep moving forward. But I think a lot of like headlines, bad headlines about the record number of zombie funds, it's not a great situation. But we have been in been here before and we've grown our way out of it. So I think there's there's some optimism. Yeah, I think I agree.

39:10The market is self-healing. I do think products will be created to take care of this over time. uh it we saw the zombie fund stories and all the we have too many portfolio or too many you know companies and funds we've done enough there's too much money chasing too few good deals no deals to do anymore we've heard this since the beginning of time the gfc in this chart we're looking at right now shows you how stark it was and then how it was created now there were mountains of private capital private equity raised and allocations increased significantly across a lot of allocators to soak up that value.

39:50And banks behaved post-GFC. I do think the banks who move too fast probably wish they had worked with the sponsor a little bit more and kind of get to the other side of it. There were some deals that should have been mega blowups that wind up being okay in the end if they just kind of all sat tight. What you're seeing right now is banks are playing with the sponsors of deals that maybe are a little over levered. Like, okay, let's give it some time. So people need to work through that. CVs have come into the market in a big way to alleviate some of this pressure, I think. And this doesn't capture that, right?

40:26A CV is an exit according to this data we're looking at. Is that right, Stephen? Yeah, that's right. And we've seen CV counts increase pretty significantly. I think so far this year, we're sort of at the same pace that we were last year. So we haven't seen a huge uptick, But it is a broader trend of more CVs. And you and I discussed that will allow higher quality assets to transact and to exit via the CV route. But some of the other assets that maybe aren't as high quality might define another exit route. Yeah. And the press loves to write about zombie funds. Like there's nothing more. I'd say, look at these rich people running these zombie funds, uh, to know three people and a golden retriever or whatever, I think it was the quote, um, uh, you know, managing down these assets.

41:19So why is that? So I'll maybe give it inside baseball. Why would, if you're not going to raise another fund, like, you know, you're not raising another fund, um, hanging onto assets, one to get into the carry. So you just let it compound and get it into the carry. So maybe you need to hold these assets longer to like generate meaningful carry for yourself personally. So there's definitely an incentive to hang on to these things. Two is there's an incentive to hang on to these things because you get paid to do it unless your LPs vote to take them away from you. So you're on year seven of a fund where you're never going to raise another fund because you've all decided to retire or do other things or whatever, or the LPs are like, hey, we're just not going to give you any more.

41:59Now, if it's really bad, the LPs can vote. Usually 70 % of the LPs of the money can vote to take that fund away from you and give it to somebody else. So then you're out of business. But if you're doing a decent enough job, now that's a pretty dramatic move and not a lot of LPs do it. If you're doing a pretty good job and the LPs are like, hey, there's value here, let's not disrupt this thing. You're getting paid 2 % of invested capital. Remember on a fund, you get 2 % of committed capital for the first five years. You raise a billion dollar fund, right? You get$20 million a year for the first five years.

42:27And then you get 2 % of what's invested from year five to year 10. And they usually get two one year extensions. So you're on year seven. You're like, Hey, I got five more years of this. Basically say you've invested, you have 800 million of invested capital, right? Um, after you, and year seven, cause you had an exit with, you know, 200 million that you deployed now back, you can't charge fees on that. Okay. That's$16 million of fees. So if you're three guys and a golden retriever, you're making$16 million. Like what's the rush and you're not in the carry yet. You want to hang on to that and, and do that.

42:59And so that those are some of the perverse incentives of us here. The LPs have mechanisms to fix that if they want to just get liquid. They can shut the fund down and just sell the assets. Now, again, there would have to be a lot of LPs would have to cooperate on that, but there are mechanisms and funds to do that. That's not happening right now. And the best assets would get CV'd. You can't CV a bad asset, continuation vehicle, right? Because you have to get new investors to come in and price it. So you can't take a really bad investment, have a fake mark and put it into a CV. One, because just people wouldn't invest in that.

43:35These are smart, sophisticated investors. Two is you need as a GP, so me as the GP of Parker Gale, I need to roll all my carry into the CV. I don't get to keep the carry like, oh, let's just CV this. I'll pay myself a bunch of money. And who cares if the CV doesn't work out? No, no, no. I have to crystallize, right? The carrier that gets paid. I got to invest all of that back into the CV. So I have a huge incentive for the business to continue to perform for the new CV investors. Now, I mean, we're getting, this is like a masterclass on CVs and why things are stuck. So you're CVing the best access and you're stuck with the worst ones.

44:12So the things you're worried about most are true. A fund that's long in the tooth, that's hanging on to some things, is either hanging on because there's something you don't see that the investors are excited about, or they're just stuck with some tough assets they're just going to have to work for. And the LPs have decided it's better in the hands of the people who did the deal than take it away and give it to somebody else. So I think, one, the CV secondary world can't get big enough, fast enough to take care of this overhang. So people just have to capitulate and sell. So what happens is you have your LPAC meeting, your LP advisory board meeting once or twice a year.

44:49You ask your LPs, or you should, hey, where are we at? Should we just sell these things off and we all take the hit and we move on? Or should we hang on to these things? And LPs will maybe eventually get to the place where they say, you know what, I'd rather have a 1.5X now than maybe the potential possibility of a 1.8X, a 2X in the future, because I want to redeploy this capital somewhere else. That's not happening in a meaningful way right now, obviously, because, yeah, the GPs often have most of the power. LPs rarely use their power because they don't want to screw up the relationship. Also, it's like they've got 50 other GPs.

45:30Like, are they really worried about this one? And they think that people have the right incentives to do the right thing, which I think mostly they do. But it's a tough spot. Like, the LPs have to come and say, like, hey, take the L, give me my money back, and let's move on. because all of their models said that they were going to get 25 % of their money back every year. And it's been like 10 % to 11 % for a long time, maybe 14%. So the model breaks when you're not getting 20 % to 25 % of your capital back every year. So then you can't redeploy it and you're kind of stuck. So everything gets constipated.

46:04And I'll let you chime in after that long rant that I just had about what's going on in the space. And then we can, yeah, let's take this slide down, go to the talk for a little bit, and then we'll go to the next one, which is showing the fact that, hey, a lot of people are raising a lot of funds right now. Yeah. And I was just going to say, I wonder if AI is giving GPs the ability to sell themselves a story that like, hey, there might be a new hope for this business. Maybe it was struggling, but I can pivot it now into something that's AI enabled or I could use AI to software business to accelerate my engineering team and I can deliver more products or features to users.

46:51And I wonder if there's a little bit of that as well. Just it's easier to talk myself into like, how do we hold onto this? See if I can inject AI successfully and maybe pivot this business and find a better exit. And if that's leading to a little bit of that stalemate that we're talking about. Hey, private equity investors are optimists, right? So yes, that's definitely happening across the country at Monday meetings of like, hey, how do we use this stuff to make this a better business? Now, again, while Q3 last year was a banger quarter for exits, right? It didn't make up for kind of a really bad Q2, really bad last year, and a pretty good Q1, OK Q4.

47:32And then this year was supposed to be the year, And then here comes Claude and the re-rating of software assets. Again, 30 plus percent of all private equity deals are software deals now. That wasn't a thing in 2008. That wasn't a thing in 2002. I've got a piece coming out here soon, kind of the history of software buyouts. Like you couldn't do a software buyout in the 90s, right? And all of a sudden, now you can. Now it's 40 % of all deals have some sort of software exposure. So I think that's a problem. And, hey, we started dropping bombs and oils through the roof. We're probably going to get a rate increase, not a rate cut.

48:09So like everything's kind of, and debt isn't as available. Like deals over a couple hundred million dollars. It's hard to get a lot of debt these days because everybody's sitting on a lot of things and they're kind of being pretty cautious. So all of that is feeding into this thing at a time when everybody thought things would be ripping, especially, you know, Republican administration, et cetera, et cetera. Lena Khan, not in the seat anymore. Oh, we can do deals again. And none of that has happened. So everybody, I think if they were being honest with you, they'd just shrug their shoulders and be like, I have no idea what this is happening right now.

48:39Records amounts of private capital, you know, Republican administration, lack of regulation. We should debt generally available, but maybe not at the levels, but like people just got to capitulate. I do think the entry prices are too high and people don't have the number, the performance to kind of go into a process confidently, which gets to like the way you do deals. As you go back to basics, you buy funky stuff with an opinion. You work it pretty hard and you try and get a return on something that's not so obvious. What I would say is interesting too is we also write an M &A report and you're seeing M &A mega deal activity spike.

49:16and there's a lot of big M &A being done, corporate M &A. And even on the exit side in PE, you're seeing mega exits continue to corporate strategic buyers. So you've seen corporates come in at the higher end of the market and offer some relief in pockets and then doing a lot of M &A themselves while PE is sort of stuck. And so it's a really interesting sort of thing that we're going to keep watching over the next few quarters to see if that imbalance sort of corrects itself. Yeah. How do you see record earnings in the S &P, record stock index highs every week, though not widely distributed? So there's a handful of companies that are driving a lot of that highly concentrated.

50:00And then private equity stuck. It just doesn't make any sense. But let's end this on a depressing note because we go to fundraising a little bit more. No, but let's just, you know, you're the Steve Kornacki of private equity data for us, if you'll take that mantle. So let's finish off on kind of what's actually going on behind the numbers. So let's pull up slide eight here, chart eight, to talk about like, you know, what fell off a cliff on the fundraising side. And then we'll finish off on kind of DPI by vintage, which is a busy, but I think really, really powerful chart. So what are we looking at here?

50:33And, you know, you look at it by the numbers like, oh, geez, not a lot of funds closing. And the ones that are closing are big ones. Yeah, exactly. And I'm happy to take the I don't know if I'm happy to take the Steve Kornacki mantle because I don't know if I live up to that yet. I'm a as a Steve Kornacki super fan. That's a big, big pressure. You're my Steve Kornacki. So you got that. But what we're seeing with fundraising is similar concentration that we talked about. Fundraising totals are, they're okay, right? They're about on pace with last year, which was relatively muted down from what we saw in 21, 22, 23, 24.

51:15But the real story is the fund counts are falling. And what that signals obviously is concentration, that larger funds are closing. KKR closed the North America fund. And there is a little bit of timing in these data that can skew. One thing, which is why we don't like to look at just one quarter, but KKR closing a mega fund, you're seeing some other 10 billion plus funds close as well. Blackstone closed the - Clearly just closed a big fund, I think 14 or 16 billion. So yeah, a lot of big funds. Funds are continuing to fundraise. And I think one of the most alarming things of the data that we saw was first time fund accounts have almost cratered.

51:56So it's almost impossible to start a new fund today, which goes back a little bit to your discussion on zombie funds that we have potentially some zombie funds that may not raise another vintage. And we have very few new entrants into the market. And that is a recipe for that capital to continue to concentrate. And these numbers don't even include the evergreen fundraising that we discussed, which is starting to pick up steam and also going to those larger managers. So it's definitely a very interesting period for private equity where the largest managers continue to raise money. And, you know, we could debate whether the returns merit that, but they continue to raise money.

52:36They continue to offer something that their clients want. And, you know, some of the middle market and especially new entrants are struggling. And I think that's a negative sign for that growth that we want in order to sort of grow out of this glut of aging asset. So we'll keep an eye on it, but that's where we're at. Yeah, I mean, allocators are smart, right? They're looking at what they think they're going to get out of the public markets and what premium they can get out of the private markets. If they're allocating to these very large funds, they know the data. They can see, they read PitchBook.

53:08They understand what they're getting. And they're saying, I'll take a tighter band of predictability of what I think will be declining returns on the public markets over the next 10 years, given usually when we're at these level of highs and these PE multiples, usually the next five or 10 years coming out of that aren't great. So I think they have muted expectations for the public markets, despite what's going on, and would rather take a tighter band of outcomes for larger deals. Um, though I think it was every quarter that goes by, um, uh, and I'm talking my own book here is that these, that return, you know, may not be worth, uh, worth it.

53:46Um, given where some of these bigger, bigger funds are delivering at this, at the moment versus middle market and lower middle market funds. This is, I think it's the best time to start a private equity firm, uh, even though there are no first time funds. Uh, so I'm record with that when there's, you know, complexity out there and you've got a certain set of skills, um, like Liam Neeson, or you have good access, you have unique access to deals and unique insight into the markets. As long as you can wrap that around with a unique set of skills, uh, I think you can do great in a market like this.

54:18Now it takes an aggressive, uh, and, and forward thinking allocator to get behind that. So it may not be, Hey, we've, you know, we've got great pedigree and, you know, and, uh, and we, we can take our track record with us, give me a billion dollars. I think that's harder than ever. But hey, we've got a great track record. We have got unique access, unique skills. Let me raise$250 million to get started and we can give out a bunch of co-invest. We get creative here. I think that's a really good strategy. And I think one of the challenges you're seeing on the fundraising side is it starts in 2023, as you see start in this chart where that was like the peak, right?

54:58A lot of money got raised then. And if you know what happened in 24, 25 and so far, as we've already talked about, not a lot of deals are getting done, right? Deal counts were down generally. It's hard to deploy capital in a meaningful way. So a lot of people are still sitting on a lot of dry powder to deploy. And if you're an LP, you're thinking, okay, I can allocate to a new 2026 vintage. You could say, I've got a plenty of 2026 exposure because I invested in 23 and 24, and these guys have only called half the capital. Again, remember back in the day, I started in 1996 in private equity, 95, 96, a long time ago, you would raise a fund every four or five years.

55:40This whole like raising every 18 months to 24 months like that, that is an outlier. So you have to deploy the capital, you need to return the capital, then you get to go back to market. So I think the fundraising timing and spacing is getting spread out more than it ever has. And it was never good to have, you want diversification across funds, but you also want diversification within a fund across years. And this fact that people are deploying capital in 12 months and coming back for another fund twice its size, I don't think was healthy and didn't have a lot of discipline. That discipline's back because it's just harder to get deals done.

56:18And I do think a lot of LPs have said, I've got a ton of unfunded commitment to private equity. I've got plenty of exposure to 26 and 27 in the current GPs I'm in. I'll sit tight and maybe look for something funky or some yield or some maybe I'm going to go international when I haven't. I'm looking for something different than I already have. And I think that's a challenge for North American funds right now is there's a lot of exposure already in the institutional LP base to North America. let's finish off on the most fun chart number nine here which is uh really just shows kind of dpi by vintage and it's pretty stark dude yeah i mean as we just got 2018 and onwards you just saw dpi fall off a cliff and a lot of that as we've discussed is you know if you raise a fund in 2018 you're deploying in 2020 2021 and so on and so forth and at those higher higher prices where it's been hard to get people to buy those assets at the same price or higher prices, ideally.

57:19Right. So you can actually make some money. And so, you know, that is causing, I think, a bit of a confidence crisis for LPs, you know, questioning how much should I continue to allocate to private equity? Is this structural? Right. Is this something that is going to continue for a longer period or is it a blip? Right. Or continuation funds and secondaries, are those structural and are those going to be the ways that i'm going to need you know if i'm if an lp i'm doing lp led secondary generate liquidity am i going to have to deal with continuation funds going forward um instead of a traditional exit and i think you know this chart just shows i think where a lot of those concerns are coming from and so you know we keep harping on it but i think it's like we need those exits we need capital that can start to flow and go through the system and bring confidence back to everybody that private equity is going to continue to work like it used to.

58:16And, you know, we'll see if that happens in the next few quarters, next few years. But, you know, this chart is sort of that, you know, underlying sort of illness that is causing some of the symptoms we're seeing. Yeah. So anything kind of red or amber, dark yellow is below benchmark on this. So you see a lot of, you don't see a lot of green here, number one. And the way DPI for people who maybe aren't as nerdy as you and I is distributions to paid-in capital. And the way you read this is if you had a DPI of 0.02 and you had$100 million fund, you'd have returned$2 million for your LPs, 2%. So you read it as a percentage of the fund size, basically.

59:01So assuming the fund is fully invested, the distributions to paid-in capital. I've paid in this much for deals and fees and everything else, and you've paid me back this much. So DPI can be very high early in a fund if you have a winner and then kind of come back down, but your DPI should converge with your TVPI, total value to paid in capital, over time. Those things should converge. So anything below one for a fund seven, eight years old, you're pushing your luck. And this is, again, why fundraising timing is getting spread out, because I think LPs are saying, come back to me when you return capital, right?

59:41I gave you $100 million. Give me back 70, 80, 90 million of that, and then I could give you another 100. I'm not giving you back, giving you$100 million if you've given me zero back since the last time I wrote you a check. That, you know, for four or five years, that happened a lot between 2018, 2022. I think that hasn't happened so much anymore. You got to return the capital before you can get new capital back. Anything on fundraising you want to cover before we hit the closing questions here? No, I think same thing that we discussed a little bit earlier, just keep an eye on the evergreen space.

1:00:16I think that that's an area where we're going to see a lot of growth. And my personal belief is I think there's going to be growth both on the retail side and I think there will be growth on the institutional side as well. I think you'll see some institutional adoption of some of these evergreen funds as sort of a new way to do private equity. And we'll see how that succeeds. But I think in terms of, hey, we're looking for growth drivers and something to help clear out some of this backlog. I think that's one area that I would keep an eye on. And we have some good data on it as well that we're publishing to track that market.

1:00:50Great. I'd say the headlines come out of this are, you know, the market's refusing to transact at lower multiples. So I'll sell you something, but it's got to be at a primo multiple or the multiple I'm carrying it out, if not above that, right? That's one. Mega deals are the tail wagging the dog, right? It's a bigger percentage of total deal value than it's been in a long time, right? Because things are kind of stuck. Big deals are getting done. Smaller middle market deals are mostly add-ons, which are significantly smaller dollar values, right? 75 % of the volume, but 40 % of the value. AI is everywhere and getting everybody scared, kind of in the like, I get paid to wait.

1:01:29So why transact now until things sort themselves out? I'll wait. So why try and guess where AI is going? And we've been here before, but it's going to take some creativity and maybe some new products in the market, evergreen funds and other things, more secondaries to kind of figure this out. Now, if you want to go deeper on secondaries and kind of 401ks coming into the market and what these evergreen and other structures look like, a few weeks back, look for an episode called 401k, private equity in your 401k that me and Nazar, the head of research at PritchBook, walked through. and we go deep into the wrappers and the structures and the pricing and kind of where this is all headed, to your point, all headed to the very large allocators, or sorry, the very large private equity funds.

1:02:17So the Blackstones, the KKRs, the Apollos, they already have wealth management business. They have the compliance and the structure and the plumbing to handle all this and the ability to be transparent, almost as transparent as public investors. Now, the concern of that is, okay, here comes the retail investors to be the bag holders for private equity. It is a valid concern. My sense is those firms will have different structure. These entities will have interesting structures and things, and maybe there'll be buckets of things that they would go after. So kind of blend it across what you own. You're not just going to be buying up all the worst assets from private equity firms because there are people who are deploying that capital, and they're not there.

1:03:01They don't get paid to buy really bad assets, in my opinion. Exactly. And on that point, too, we saw, you know, as I was looking at the performance, that chart we showed earlier, the growth that got us out of that post-GFC glut. And some of those vintages that were, you know, the prices were lower, which is important distinction, but those vintages were high performing. And so it's really, I guess, depends on who caves first, right? That new money comes in. Are people going to be willing to sell it at lower prices? But historically, we've seen some of those growth vintages are good, well-performing vintages.

1:03:32And 2026, given what you just walked everybody through, has an opportunity to be a very good vintage for people who are not just paying the top dollar for the top asset, but are finding these seams and pockets of transactions. Because there are still thousands of transactions that are getting done, right? It's not like they're zero. All right. We usually end this on, hey, give me a prediction. like something you'd bet your bonus on that maybe isn't so obvious, like you're so deep in the data. Is there something you're seeing that 12 months from now will be on this call? Or you're saying like, yeah, I called that.

1:04:05I probably already spoiled it a few times, but I think it's the evergreen fund growth. I think that space is just primed to take off. I think you'll see assets. We saw them double from$50 billion to$100 billion last year. I wouldn't be shocked if they're at$200 billion next year. um there's you know the biggest players uh have already launched their funds those are very scale we've seen a wave of new fund launches come after that kind of say you're you know tier one b uh players so you think like a carlisle uh a cvc and some of the other larger scale managers have launched their own funds that have yet to scale and so i think with the different things that are going to get plugged in through 401ks retirement accounts and some of the early performance and those funds have been really good.

1:04:52I think that that's going to become a much bigger part of the market, a much bigger part of the conversation a year from now. I think we saw it with B-Credit a little bit and some of the credit in real estate where these things got really big before we really started to notice them. And I think that's happening right now in private equity. These funds are getting very big. Some of Black Sun's funds are north of$25 billion. KKRs are close to$20 billion. These are large pools of capital that are growing at a pretty good clip. And I think we'll be here in a year and be like, wow, that's really starting to impact things in how the market works.

1:05:31Yeah. Again, markets are self-healing and may not be obvious for a while, but the things we're worried about and talking about, they have a way of working themselves out. You know, maybe not at the historical return you expected or in the speed that you expected, but I do think these things will work themselves out. And you guys are tracking all the data. Is there anything you or your team is working on that you're excited about right now? Things that may be coming down the research pike in the next six months? Yeah, we have a note that should go out in August at some point that will be on the zombie problem.

1:06:04So sort of analyzing sort of what's the origin of this and really getting a data-heavy perspective on what is the origin of sort of the zombie problem we have and what are our potential paths out of it. we're working on some stuff around that halo rotation so where is that capital going to be deployed going forward and where within that physical economy are we seeing pockets of string and then also some stuff on on the evergreen front as well and really breaking down the players in that market uh the different ramifications for different stakeholders of if that that growth does occur and then we also have some stuff uh on exits and continuation vehicles and looking at those trends because we have what we think is probably the best that is the best data set on continuation funds and so we want to really dig into that and kind of show everybody what's happening and dig out of the hood yeah all that looks sounds really really good and for my friends who run smaller funds who are looking at money just like consolidate up to these very large firms and like you said with these evergreen funds all you know benefiting these very large firms I have two pieces of comfort.

1:07:10One, that's not private equity. What's happening at Apollo and KKR and Blackstone and these mega funds, that's a completely different financial service. I'm not saying it's better or worse, but it's not buying companies and fixing them up and selling them. That's actually quite a small percentage of their business these days. Two is PitchBook's putting out a ton of really good data, basically saying like, oh no, small funds perform really well and they're worth a look. So kind of into this kind of small as the new big, they're giving you two or three pages of your fundraising deck that you can say like, no, no, no, no, it's not as risky as a bet as you might've thought it was.

1:07:47And the data that's coming out about more recent vintages is just kind of making that point. So look that up at the PitchBook and I'm sure the team there will help you, be happy to help you sort out some of that data. Steven, he's the head of private equity, U.S. private equity research at PitchBook. He will be now known as the Steve Kornacki of private equity, and he'll be on multiple times if he's willing to come back. And we'll dig into the data and peel back what's going on behind it on a regular basis with Stephen and his team. So the only way people find this good content is if you subscribe, if you like, if you make a comment, if you share it with your friends.

1:08:25So Stephen, great to hang out. Thanks for spending time with me and bye for now. Thanks, Devin. It's been fun.

1:08:59They bicker with each other and they don't take themselves too seriously. It's not venture capital. It's private equity. It's the private equity fun cast. Pour yourself a drink and have a seat.