Whether you’re at the dentist’s office or your local carwash, chances are, you’ve encountered a business owned by a private equity (PE) fund. Firms such as KKR and Blackstone have capitalized on the potential of these businesses, transforming them into profitable ventures.

The Growth of Private Equity Funds

In the past 15 years, the number of US companies under PE ownership has more than doubled, from just over 6,000 in 2010 to almost 13,000 at the end of 2025. This represents about 7% of US GDP. These private equity-owned companies span a range of industries, from dentistry and car washes to national bookstore chains.

The Double-Edged Sword of Private Equity

As private equity’s influence continues to grow, so does public scrutiny. Many critics argue that private equity funds can leave businesses in debt and degrade services. However, proponents argue that private equity can rescue struggling businesses by making them more productive.

Investor Confidence in Private Equity Funds

Despite the criticism, private equity’s potential for high returns has attracted investors for years. However, rising interest rates have depressed valuations and made it harder for private equity funds to find buyers, which has slowed their ability to pay back investors. Recent data indicates private equity funds’ returns are only about half of the S&P 500’s returns.

Private Equity Fundraising and Future Prospects

Currently, private equity funds are facing skepticism from investors, leading to a 11% decrease in fundraising compared to the previous year. However, there are signs of a potential rebound in deal-making, sparking optimism among industry heavyweights.

The Role of Retail Investors in Private Equity

In a recent move to enhance the role of retail investors, President Trump has eased restrictions on 401(k) investments in private equity funds. This aims to help ordinary workers capture returns from these funds. However, critics argue that private equity funds pose a high risk due to limited transparency and management fees.