‘The circulatory system isn’t working.’ Goldman on what’s really wrong with private markets

The machine that powers private markets — the steady rhythm of companies being bought, built, and sold — is jammed. Hold periods for buyout-backed companies have stretched to nearly seven years, up from five-and-a-half a decade ago. Distributions to investors, the lifeblood of the entire ecosystem, have fallen far below the historical norm of 15%-20%. The average venture-backed company now takes 14 years to go public. And retail investors who piled into private credit vehicles — at a 60% annualized rate for five consecutive years — recently found themselves unable to withdraw their money when they asked. By any measure, something has changed. The question is how serious it is. Goldman Sachs has an answer — and it’s more candid than you might expect from a firm with billions at stake in the outcome. “The circulatory system is not working,” said Michael Brandmeyer, global head and CIO of the External Investing Group at Goldman Sachs Asset Management, on an episode of the bank’s Exchanges podcast. “And so, that’s making fundraising harder. It’s driving consolidation. It’s driving a lot of change in the industry.” But Goldman’s verdict stops well short of crisis. And in a market where the prevailing press narrative has grown increasingly alarmed about private credit stress, the firm’s public positioning is notable — and worth scrutinizing. How the gears got stuck To understand the current logjam, you have to go back to 2022. Between the Global Financial Crisis and the Fed’s rate-hiking cycle, private markets experienced what Brandmeyer describes as “a period of unprecedented growth” — a sixfold expansion over roughly 12 years. Cheap money, compressed volatility, and a sustained hunt for yield made alternatives an easy sell, and capital poured in. Then the Fed raised rates by roughly 500 basis points, and “everything came to a halt.” The problem wasn’t just that financin