Goldman Sachs executives said global private markets are at a structural inflection point and could rebound following a prolonged period of stagnation [1, 2].

This shift is critical for investors who have seen private equity and private credit distributions stall as the financial environment tightened. A recovery would signal a return to normalcy for the "circulatory system" of private capital, allowing funds to exit investments and return cash to limited partners.

Pete Lyon and Michael Brandmeyer, executives in private markets at Goldman Sachs, said the current slump began when interest rates started to rise in 2022 [1]. This shift in the cost of capital created a gap between the valuations of assets and the prices buyers were willing to pay, which slowed the pace of exits and distributions [1, 2].

Despite the challenges, the firm believes several factors are now aligning to drive a recovery. Sustained economic growth and rising liquidity are expected to provide the necessary foundation for a market rebound [1, 2]. The executives also said AI-driven innovation is a catalyst that could create new value and opportunities for growth within private portfolios [1, 2].

The recovery is expected to be gradual. Goldman Sachs said that longer holding periods and mixed fund performance have contributed to the current deadlock [1, 2]. However, the combination of technological advancement and improving macroeconomic conditions may finally break the impasse that has persisted since 2022 [1].

The firm suggests that the structural changes currently taking place will redefine how private markets operate. By leveraging AI and adapting to a different interest rate environment, the industry may move past the stagnation of the last few years [1, 2].

“Private markets have stalled since 2022 but are at a structural inflection point.”

The outlook from Goldman Sachs suggests that the private equity 'denominator effect'—where a drop in public market values makes private holdings appear oversized—is beginning to resolve. If AI creates tangible productivity gains and liquidity returns, the bottleneck of unsold assets from 2022 may clear, unlocking significant capital for institutional investors.