Zombie funds are going mainstream

Not the awkward tail end you quietly ignore, the default operating model for managers who can’t raise, can’t exit, but can still invoice.

Trilantic just took a very public blood transfusion: Blackstone and Neuberger putting at least $600m into a deeply discounted continuation vehicle. Call it “liquidity”. It’s a bailout with better branding.

This is just the start.

The maths has been broken for a while. Distributions dropped to about 11% of NAV in 2024, and there’s a backlog of roughly 30,000 unsold PE-owned companies valued around $3.6tn. That’s not a queue, that’s a traffic jam with leverage.

So the market does what it always does. It builds a workaround.

Secondaries are no longer a niche clean-up tool. Lazard put 2024 secondary volume at about $152bn, and Jefferies showed H1 2025 alone hit $103bn, up 51% vs H1 2024. Liquidity is now a product line.

And the “zombie” label isn’t just a Twitter insult. TREO’s research (via Buyouts/PEI) pegs tail-end fund AUM at $829bn in 2024, up 24% YoY, with expectations it heads toward ~$1tn by 2030.

What happens next is predictable. More full-fund continuation vehicles. More restructurings. More GP stake sales to keep the lights on. Less fresh underwriting, more financial engineering.

The uncomfortable part isn’t that this exists. It’s that a lot of firms have been priced on the assumption that time fixes everything. Time doesn’t fix weak assets, weak governance, or weak value creation. Time just makes the covenant tighter and the fundraising harder.

The firms that come out fine will do the boring stuff.
They’ll run portfolio companies for cash, not for decks.
They’ll earn their way out through margin, working capital, pricing, procurement, and genuine exit readiness.
They’ll accept that “mark-to-model” is not a strategy.

Zombie funds won’t be an occasional embarrassment. They’ll be the new middle class of private equity.