Private markets are adjusting to a world of depressed distributions, and it looks like LPs hoping for greater liquidity in 2025 may instead need to brace themselves for another dry year.

Zombie private-equity funds are carrying unusually high net asset values due to persistently low distribution rates. This trend challenges traditional cash-flow models and raises concerns about liquidity in private-capital portfolios.

Investors in private-equity funds already faced depressed distribution rates before the recent public-market turmoil. We chart how public-market returns and downturns in buyout and venture-capital distributions have played out historically.

Spreads on corporate mezzanine loans in private-credit funds have fallen dramatically since 2022, changing the picture on the loans that are normally deemed higher-risk than senior loans. Funds treated real-estate borrowers differently, however.