Private equity firms still have substantial capital to deploy, but putting that capital to work has become more complicated. Morgan Stanley, citing PitchBook data, reports that more than $600 billion, or roughly 55% of U.S. private equity dry powder, now sits in funds more than two years old, a record high. Higher financing costs, persistent valuation gaps, and uncertainty surrounding AI and other market disruptions are raising the bar for attractive investments. Success increasingly depends not only on identifying promising businesses, but also on structuring transactions that account for risk and establishing a credible path to value creation.

That aging capital also creates pressure to deploy. McKinsey estimates that more than 40% of the dry powder available to general partners has been waiting for at least two years. KPMG has observed that, despite this wealth of capital, sponsors cannot easily deploy it without first demonstrating an ability to return capital to investors. READ MORE