Private Equity's Exit Problem Looks a Lot Like the Late Stage of a Familiar Cycle
Economist Carlota Perez has spent a career describing how technological revolutions end. Her framework says the game always runs out of chairs. Private equity's buy-leverage-sell playbook is that same financial-capital game.
NEW YORK, August 27, 2026. Economist Carlota Perez built a career studying how technological revolutions play out. The pattern repeats with unsettling consistency. A new set of technologies draws in speculative capital. Financial capital takes over during what she calls an installation phase, pushing valuations well past anything a sober analyst would underwrite. The infrastructure for the next era gets built, paid for by that excess. Wages from the previous regime compress. Inequality widens. Eventually the music stops. Her framework was built to explain railroads and the dot-com buildout, not private equity funds. But private equity's playbook for the past 40 years follows the same script. Buy a company with leverage. Extract returns partly through financial engineering. Sell to the next buyer at a markup. That's a bet that the game of chairs keeps having enough chairs, a financial-capital strategy dressed up as an industry.
The chairs are running out. This site reported this month on an industry unsold inventory of roughly 32,000 companies worth $3.8 trillion. The number keeps climbing. Maureen Farrell's reporting in the New York Times put the more recent count at 33,575 unsold portfolio companies. That's up again from 32,451 at the end of last year, and roughly double the 15,923 held a decade ago. The industry still insists it wants the traditional way out. "They'd still always prefer an M&A exit to the extent that they can find one," Eric Juergens, a partner at Debevoise & Plimpton, told the Wall Street Journal, "but IPO has become more of a viable option given the IPO market this year. I'm not sure it'll ever be the No. 1 option." Even that fallback isn't generous. Roughly 70 private-equity-backed companies have gone public on US exchanges since 2022, according to Dealogic, down from 424 between 2017 and 2021.
The strange part is that the broader deal market looks fine. SpaceX just priced the largest IPO in history. David Ellison is pursuing a roughly $110 billion Paramount-Warner Bros. combination. NextEra struck a deal for Dominion Energy north of $120 billion. Dealmakers are racing what they see as a closing window before a new administration tightens rules on megamergers. Almost none of that activity is a PE portfolio company exiting. A busy deal market and a stuck PE industry are not the same fact. Conflating them is how the backlog keeps getting explained away.
That gap is exactly what Perez's framework predicts near the end of an installation phase. Some parts of the economy are riding genuine growth right now, AI-era infrastructure spending and the megadeals it's financing. Those stay loud and visible. The older financial-engineering machine quietly seizes up underneath, out of view. None of this means a crash is imminent. It does mean one thing. Record IPO and M&A volume doesn't prove the exit environment is healthy, not for the part of it carrying the backlog. What's stuck is a specific kind of deal, the one private equity's whole model depends on. Someone else has to agree to pay a markup for a company bought on leverage. That kind of deal has gotten a lot rarer than the headline volume suggests.