Apollo President Warns Private Equity Must Capitulate on Valuations
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
private-equityvaluations
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Apollo Global Management Co-President Scott Kleinman stated that private equity firms must begin capitulating on portfolio company valuations to restart a stalled exit environment. Kleinman delivered his assessment on June 10, 2026, during an interview with Bloomberg at the SuperReturn conference in Berlin. He cited extended hold periods that are compressing internal rates of return across the $8 trillion industry as the primary catalyst for an impending valuation reset.
The private equity industry is contending with the most challenging exit environment since the 2008 financial crisis. Elevated interest rates have fundamentally altered capital allocation math, with the Federal Funds Rate holding at a 5.25%-5.50% band since July 2023. This has shut down the IPO window and made debt financing for large leveraged buyouts prohibitively expensive.
Funds are now holding assets for a record median of 6.2 years, exceeding the typical 5-year investment horizon. This duration mismatch creates a liquidity crunch as the 2019-2021 vintage funds, which raised over $1.2 trillion, approach their intended harvest periods. General partners are facing mounting pressure from limited partners to return capital and demonstrate performance in a market where traditional exit routes are closed.
Kleinman’s comments signal a strategic pivot from one of the industry’s most influential leaders. Apollo manages over $650 billion in assets, giving his diagnosis of valuation stubbornness significant weight. The industry has been locked in a standoff with buyers, but Kleinman asserts the pain of diminishing IRRs will force sellers to finally budge.
Private equity deal volume plummeted to $246 billion in the first half of 2026, a 38% decline from the $396 billion recorded in the same period of 2021. The number of completed buyouts fell to 1,847 from a peak of 3,112. This slowdown has created a massive overhang of unrealized portfolio value awaiting an exit.
The impact on performance is quantifiable. The median net IRR for funds with vintages from 2019-2021 has fallen to 11.8% from 15.4% just two years prior. The dispersion between public and private market valuations has narrowed significantly. The S&P 500 trades at a forward P/E of 19.5x, while the average late-stage private tech company valuation multiple has compressed from 24x to 18x revenue.
| Metric | 2021 Peak | H1 2026 | Change |
|---|---|---|---|
| Global PE Deal Volume | $396B | $246B | -38% |
| Median Hold Period | 4.8 years | 6.2 years | +29% |
| Median Net IRR | 15.4% | 11.8% | -360 bps |
Dry powder dedicated to private equity has soared to a record $2.59 trillion globally. This capital remains largely sidelined due to persisting valuation gaps between what sellers demand and what buyers are willing to pay. Business development companies (BDCs), which provide debt financing to middle-market companies, have seen their yields climb above 11%, reflecting higher perceived risk.
A widespread valuation capitulation would have significant second-order effects across capital markets. Public market comparables for sectors heavy with private ownership would face immediate downward pressure. This particularly affects technology (XLK), healthcare (XLV), and financial services (XLF) sectors where private ownership concentration is highest.
Private equity-backed IPOs could finally restart, providing a new supply of equity issuance that has been absent for over 24 months. This would benefit investment banks (GS, MS) whose advisory and underwriting revenues have declined. Special purpose acquisition companies (SPACs) that still hold trust assets might find viable merger targets at more reasonable valuations.
The counter-argument suggests that limited partners may simply accept lower returns rather than force fire sales, particularly if they believe holding assets longer will eventually yield better outcomes. This could prolong the stalemate despite Kleinman's warning. Current positioning shows institutional investors are redeeming from private equity secondary funds at a 15% higher rate than subscriptions, indicating impatience with the illiquidity premium.
The timing and magnitude of valuation adjustments will depend on several near-term catalysts. The Federal Open Market Committee meeting on June 18 will provide critical guidance on the path of interest rates for the remainder of 2026. Any signal of dovish policy would reduce financing costs and narrow bid-ask spreads.
Second-quarter earnings reports in July from publicly traded alternative asset managers Apollo (APO), Blackstone (BX), and KKR (KKR) will provide transparency on mark-to-market valuation changes within their portfolios. Watch for increased provisions for investment losses or commentary on pacing of realizations.
The volume of secondary transactions, where private equity stakes are sold between institutions, serves as a key indicator of pricing discovery. If secondary transaction volume increases by more than 20% in Q3 with average discounts of 15-25% to carrying values, it will confirm the capitulation Kleinman anticipates is underway.
Retail investors are primarily exposed through public shares of alternative asset managers like Apollo, Blackstone, and KKR. These stocks may experience volatility as their assets under management are marked to market. Retail investors in mutual funds or ETFs holding private company shares could see NAV adjustments. The broader equity market may experience downward pressure as private company valuations converge with public multiples.
The current environment most resembles the period following the dot-com crash when private equity funds held assets for extended periods until public markets recovered. The key difference is the magnitude of dry powder, which is three times larger today. This creates more pressure to deploy capital, potentially leading to a sharper correction when valuations finally break as buyers have ample capital to wait.
Enterprise software and fintech sectors carry the highest vulnerability due to their previous premium valuations and high dependence on debt financing for deals. Healthcare services and traditional industrials may prove more resilient as their valuations are more closely tied to EBITDA multiples rather than revenue growth projections. Business development companies that lend to middle-market firms may see increased default risk if portfolio company valuations decline significantly.
Private equity's delayed valuation reset threatens fund returns and will pressure public market multiples.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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