Cash flow gridlock: understanding the private equity distribution challenge

November 2024

Over the last three years, many investors have experienced a considerable decline in the distributions they had grown accustomed to receiving from their private market investments.

The liquidity that fueled a robust cycle of exits and distributions slowed dramatically beginning in 2022, coinciding with the rise in interest rates. Many general partners (GPs) responded by extending hold periods and seeking alternative sources of liquidity, leading to a collective bottleneck in distribution activity in private equity.