Little more than one year ago, New York City’s Vestar Capital sent a surprising message to its limited partners. After decades of growth, it was scrapping plans for its eighth private equity fund and would instead focus on improving its existing portfolio of companies. Its most recent fund, Vestar Capital Partners VII, launched in 2018 with $1.1 billion but has been limping along with an internal rate of return of 7.7%, significantly lagging the S&P’s average return of 14% over the same period.

Vestar was born in 1988 during private equity’s first boom, the same year a brash NYC firm known as Kohlberg Kravis & Roberts took down mighty RJR Nabisco for $25 billion ($70 billion in today’s terms), back when deals were called LBOs and dealmakers were known as corporate raiders. A lot has changed since then. With more than 15,000 firms worldwide and $9 trillion in global assets, private equity is now mainstream. Vestar’s founders were bankers at First Boston who left to specialize in buying and selling companies like red plastic cup king Solo and Big Heart Pet Brands, known for Milk-Bones. One of their best deals: the $175 million purchase of Birds Eye Foods, sold in 2009 for $1.3 billion.

But now Vestar is looking inward to 12 companies it picked up over the last 13 years, including veggie food brand Dr. Praeger’s, frozen berry processor Titan and PetHonesty, maker of alternative medicines for pets. Vestar hasn’t invested in a single new portfolio company since 2023, and it announced the sale of only one in 2025, unloading cracker maker Simple Mills, in which it bought a stake in 2019, to Flowers Foods Inc. for $795 million.

In an industry built on the constant churn of buying and flipping companies for a profit, Vestar’s future is in question. Its assets under management have withered from $7 billion 15 years ago to $3.3 billion in 2024 as of its latest SEC filing. Vestar declined to comment for this story.

Welcome to private equity’s new era: the age of the PE zombie. Similar stories are playing out throughout North America and Europe, as an industry that was once a golden ticket, minting dozens of billionaires, is going through difficult times. Consulting firm Bain & Co. reported last year that more than 18,000 private capital funds were in the market, collectively seeking to raise $3.3 trillion, but it projected the total amount raised would be only a third of that, with more being allocated to credit and infrastructure funds rather than traditional buyout strategies.

Data from private equity analytics firm Preqin shows that the average fund that closed in 2025 spent 23 months in the market fundraising, up from 16 months in 2021, and fewer funds are meeting their fundraising goals at all. In 2025, a total of 1,191 buyout funds raised $661 billion, down from 2,679 funds and $807 billion in 2021. Blue-chip megafunds continue to attract capital, bucking the trend. Thoma Bravo raised $24.3 billion in its 16th flagship fund last year, Blackstone closed on a $21.7 billion fund and Veritas Capital raised $14.4 billion. Veritas’ billionaire CEO, Ramzi Musallam, told Forbes that consolidation is favoring high performers, adding that “a lot of funds that exist today won’t necessarily exist five years from now.”

Firms that don’t have top-tier performance or unique strategies are getting left behind. In an industry whose lifeblood is fresh capital, there are simply too many funds and not enough dollars in pensions, endowments and other institutions to satisfy all of them. A large number of midlevel firms are........

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