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Bailey McCann, Opalesque New York:

As we head into a new year allocators are taking a closer look at their private markets portfolios. 2025 was another year marked by persistent denominator effect issues in portfolios as well as a slowdown in fundraising for private equity and venture capital.

On the M&A front, exits did pick up toward the end of the year, which means that IRRs for many private equity and venture funds are within normal ranges, according to performance data from PitchBook. Tighter credit spreads, combined with 150 total basis points in rate cuts from the Fed, have favorably shifted debt costs to more reasonable levels. The yield to maturity of B-rated leveraged loans trading in the secondary market was 8.1% as of the end of November, PitchBook data shows. At the current target federal funds rate of 3.8%, the average yield on new-issue leveraged loans to finance buyout deals completed in 2025 was just 7.3%.

The average EBITDA purchase price multiple for LBOs financed through the syndicated loan market this year was 11.1x, compared with 11x in 2024. Financial leverage in buyout deals has increased slightly to around 2.2x as rates have fallen, but it remains below the levels seen for much of the 2010s, around 2.5x. If rates go down further in 2026, leverage levels might creep up which could potentially improve interim returns for private equity and venture capital.

Despite the positive shift in these data points, the backlog of companies ready fo......................

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