Private Equity 2026: USA – Delaware
September 28, 2026
Publication| Fund Finance| Private Equity Funds| Limited Liability Company & Partnership Advisory| Structured Finance| Legal Opinions
Addressing End-of-Life Issues in Delaware Funds
A record amount of private equity capital currently sits in funds that many investors expected to have fully wound up years ago. As of the end of 2025, the net asset value (NAV) of US private equity assets held in funds at least a decade old was USD348.5 billion, about three and a half times what it had been in 2015 (Mark Maurer, “Private-Equity Assets Stuck in ‘Zombie Funds’ Are at a Record High”, Wall Street Journal (21 July 2026)). These funds are becoming increasingly common. Sponsors that acquired portfolio companies and other assets at 2020 and 2021 multiples and financed at rates near 0% may struggle to find buyers willing to pay those prices today (Id.). Exit activity is still running well below the 2021 peak, and distributions as a share of NAV have fallen to record lows (Patrick Warren et al., “Private Capital in Focus: Depressed Distributions, No End in Sight”, MSCI (22 May 2025); Daniel Hadley, “Night of the Living Fund: The Rise of Zombie Private Equity”, MSCI (12 May 2025)). A sponsor holding assets it believes may be worth more than today’s bid must decide whether selling now best serves its investors’ interests.
What makes these situations challenging to resolve, though, is the inability of even the most diligent parties to draft fund agreements that contemplate every possible scenario. Fund agreements drafted over a decade ago did not contemplate today’s economic reality, making the decision of how to dispose of a fund’s “illiquid” assets more difficult. This article addresses issues, and potential solutions, from a Delaware law perspective, with a particular focus on private equity funds formed as Delaware limited partnerships.