PE and Caesar’s Wife

In the US, the PE (or LBO) asset class is over three times larger than VC in terms of dry powder. Structurally, PE targets mature, low-growth, cash-producing businesses using significant leverage — typically financing roughly 45% of the purchase with debt — while VC backs high-growth, loss-making technology startups almost entirely with equity.

PE is a thriving industry in the US. According to PitchBook’s 2025 data, PE investors deployed over $1.1T across more than 9,000 deals, marking the second-highest year of deal activity on record.

But these impressive deployment figures mask a growing structural concern. Last week, the Financial Times published an article titled “Private equity firms sell assets to themselves at a record rate,” highlighting a practice that increasingly resembles Ponzi-like dynamics: in 2025, roughly 20% of all PE exits involved firms raising fresh capital from new investors to purchase portfolio companies from their own aging funds.

According to Raymond James, this represents a sharp increase from the 12-13% observed in prior years, amounting to a staggering $107B in such recycled transactions in 2025.

This surge has been driven by so-called “continuation vehicles,” which allow large PE firms to provide liquidity to LPs in older funds while retaining control of the underlying assets — and, crucially, resetting the clock on management fees and carried interest — often with the same PE firm effectively sitting on both sides of the transaction.

The FT notes that this continuation-fund practice now extends to many of the industry’s most prominent firms: “PAI Partners flipped part of its stake in ice cream giant Froneri (think Häagen-Dazs) to a continuation vehicle for the second time in a €15 billion-valued deal. Vista Equity, New Mountain Capital, and Inflexion all deployed multibillion-dollar continuation funds to cling to their crown-jewel investments rather than face the harsh light of public markets or genuine third-party buyers”.

Some cases have even spilled into court. The Abu Dhabi Investment Council sued Energy & Minerals Group over an alleged undervalued self-sale of gas driller Ascent Resources; the deal collapsed, and outside bidders are now circling.

Conclusion

From a PE outsider’s perspective, VC transactions look more like Caesar’s wife — above suspicion.