The primary growth drivers for private equity—sovereign wealth and private wealth channels—prefer concentrating capital in large, brand-name firms. This capital shift starves middle-market players of new funds, leading to a likely industry contraction where many may have unknowingly raised their last fund.

A staggering 56-58% of middle-market companies brought to market annually for the past three years did not sell, a dramatic increase from the historical average of 10%. This statistic reveals a massive and persistent valuation gap between what sellers expect and what buyers are willing to pay.

Contrary to a slow market narrative, deal flow has sharply accelerated. Blackstone's Michael Zwadsky revealed that August 2024 was the firm's biggest investment committee month in three years, and the summer was the third most active for M&A since 2008, signaling a real inflection point for transactions.

Despite headline figures suggesting a venture capital rebound, the funding landscape is highly concentrated. A handful of mega-deals in AI are taking the vast majority of capital, making it harder for the average B2B SaaS startup to raise funds and creating a deceptive market perception.

The media's obsession with a few dozen AI mega-rounds creates a distorted view of the early-stage market. Data shows that of the ~1,500 seed deals done per quarter, the vast majority remain within traditional parameters ($1-5M checks, sub-$30M valuations). Founders and investors should ignore the headline noise.

The private equity market has abundant capital and willing companies, yet transactions are stalled. This is because General Partners (GPs) fear selling at low returns and Limited Partners (LPs) fear over-commitment due to liquidity concerns, creating a gridlock where no one wants to act.

While private equity purchase activity tripled over the last decade, acquisitions by strategic buyers remained flat. This creates a massive, underappreciated supply/demand imbalance, as strategics historically accounted for 60% of PE exits, leaving a $3.6 trillion backlog of unsold companies.

The 15 largest PE firms control 20% of industry AUM and have mastered capital aggregation through insurance and wealth channels. Their primary business challenge is now deploying this capital into enough quality deals, while every other firm still struggles to raise funds.

Total private asset fundraising was flat, but this masks a crisis in buyouts, where fundraising fell 16%. The cause is an unprecedented four-year stretch of low distributions to LPs (below 15% of NAV), straining their ability to recommit capital and doubling capital recycling timelines from four to eight years.