Private Markets Face Liquidity Challenges as Deal Flow Slows, Goldman Sachs Says

Private markets are experiencing what Goldman Sachs describes as a broken "circulatory system," with buyout-backed companies staying in portfolios for nearly seven years versus five-and-a-half years a decade ago, and venture-backed companies taking 14 years on average to go public. Investor distributions have fallen well below the historical 15%-20% norm, and retail investors in private credit vehicles have faced withdrawal restrictions. The underlying cause traces to the Federal Reserve's rate-hiking cycle beginning in 2022, which made financing more expensive and created a valuation gap between sellers expecting pre-rate-hike prices and buyers unwilling to pay them. Goldman's assessment stops short of declaring a systemic crisis, though independent data shows rising default rates in private credit—Fitch's U.S. Private Credit Default Rate climbed from 5.8% in January 2026 to 7.0% by April, and Proskauer's index recorded a 2.73% default rate in Q1 2026 versus 1.84% a year prior. Goldman acknowledges pockets of stress in software-heavy and over-leveraged companies but argues current conditions reflect a return to historical norms rather than systemic failure.