Private equity’s struggles may be harbinger of a bigger economic crash

Investors in private equity firms are in a bit of a bind. Maureen Farrell reported in The New York Times this month that they are sitting on 33,575 companies they have not been able to sell or list at prices their investors will accept. This is up from 32,451 at the end of last year and roughly double the 15,923 they held a decade ago. It is the third consecutive year the pile of unsellable assets has grown. And the way PE firms like to exit their holdings, by selling their companies to a buyer for a rich premium, is just not happening. Eric Juergens, a partner at the law firm Debevoise & Plimpton, in a recent Wall Street Journal article, observed with respect to such firms, “They’d still always prefer an M&A exit to the extent that they can find one, but IPO has become more of a viable option given the IPO market this year. I’m not sure it’ll ever be the No. 1 option.” Indeed, the deal and IPO boom that was widely anticipated has now shown up. SpaceX just set the record for the largest IPO in history. David Ellison is chasing a $110 billion combination of Paramount and Warner Bros. NextEra struck a deal for Dominion Energy at north of $120 billion. By volume, the first half of 20…