private Equity is in a funk PE borrows money to buy companies with the hope that they can improve their value and sell them at a profit but that business model fell apart when the US Federal Reserve started hiking interest rates two years ago it has become more expensive to borrow money to buy and sell companies leading to a backlog of deals and a lack of money being returned to investors in private Equity Funds there’s also a fear that companies bought during the Heyday of 2021 deal making may not be worth what private Equity Funds paid for them because private Equity has around 10 years to buy and sell a company they’re content to wait until things get better but us pensions and other investors that give private Equity money to do deals are getting increasingly impatient because no one is selling companies right now pensions haven’t been getting their money back private Equity firms have tried to Plate their investors through various forms of financial engineering such as boring money against their investment funds to pay out distributions but nothing beats selling a company through a regular sale or initial public offering the FED gave the industry a glimmer of hope last month when it cut rates but with a backlog of deals and increasingly disgruntled investors it’s going to be a while before things improve