At the beginning of August, rumours emerged that the chocolate bar and pet food giant Mars wanted to take over its competitor Kellanova, a specialist in savoury snacks. A few weeks later, the 36 billion dollar deal, including 6 billion dollars of Kellanova debt, was as good as done. It will be one of the largest transactions this year.

At a pace like that, the private equity sector cannot keep up. In fact, quite the opposite. From Alloheim and Apleona to Stada, Techem, Springer Nature or Springer, an increasing number of big-ticket, billion-euro private equity deals or planned IPOs from the portfolios of financial investors are dragging on forever.

The worst was last year. The total amount of deals in which portfolio companies were sold on – exits in private equity jargon – fell by almost half. The situation was no better for fundraising: 38% fewer buyout funds were closed. The market had come to a standstill. The reason for this was the drastic and rapid rise in central bank interest rates, which prompted investors to press the pause button. In the meantime, interest rates have long since stabilised, and the question is when and how quickly they will fall.

Investors' as yet uninvested capital commitments – or dry powder – are piling up to record amounts in the trillions. Yet the sector is stuck in its old investments. Almost half of all global buyout company investments have been held for at least four years. Their value totals more than 3 trillion dollars.

Actually, after pressing the pause button, the „go“ should now follow. But in Germany at least, exits remain a rarity. Many companies were bought at a time when debt capital cost almost nothing, and were therefore valued so highly that sellers and buyers are now unable to agree on a price.

Furthermore, the IPO market is virtually closed. There were the IPOs of the Spanish cosmetics and perfume group Puig, and the Swiss skincare giant Galderma from EQT's portfolio, and the debut of the financial investor CVC in Amsterdam. But that was about it. The initial listing of Douglas from the CVC portfolio was a flop, and Permira had to cancel the IPO of Golden Goose in Milan.

The excessive debt of private equity portfolio companies is often a reason for investors' reluctance. In the meantime, however, there is also a fundamental mistrust of IPOs from private equity investors, that cannot be dispelled by debt reduction alone. If the IPO market is currently closed, then there is no visible exit route, which is particularly needed for large investments. Nobody is going to acquire a multi-billion-euro stake in a company if they fear that a gradual partial exit via the stock exchange will not be an option for a long time.

Each case is slightly different. In the case of retirement home operator Alloheim, for example, which is owned by Nordic Capital, the turnaround in interest rates and the retirement home scandal involving French group Orpea got in the way of a successful auction. Nobody wanted to bring such a compliance risk into their portfolio with the scandal in mind.

At pharmaceuticals manufacturer Stada, on the other hand, the high level of debt, and a separate but significant Russian business, spoke against a smooth deal. In the case of Techem, valuation differences have actually meant that the deal has been on ice for months. Every case is different, but what they all have in common is that they are not making progress. The private equity sector can only hope that the forthcoming interest rate cuts will break the deadlock. But that is not certain.