Debt-financed acquisitions of technology companies have delivered weaker returns than public equities. US buyout funds returned about 15% annually over the past decade, trailing venture funds.
In its “Is Private Equity Cooked?” report published on November 4, 2026, Andreessen Horowitz said US buyout funds underperformed the Russell 3000 over that period. The findings question the returns from acquiring control of businesses, improving their value and selling them while carrying substantial debt. US venture funds overall returned about 18% annually, beating the index by 2.3 percentage points.
Low interest rates helped underpin buyouts’ earlier success. Citing Bain, the report said rising valuation multiples accounted for more than half of buyout returns in the 2010s. Cheap borrowing and higher resale valuations supported performance. Higher financing costs and acquisition prices that have not fallen have since made those returns harder to achieve.
According to Bain’s analysis cited in the report, a typical acquisition in 2015 could return 2.5 times invested capital over five years with annual earnings before interest, taxes, depreciation and amortization growth of about 5%. Achieving the same result now requires annual growth of 10–12%. Meanwhile, revenue growth among software borrowers financed by Golub Capital fell from 9% to below 3% over two years.
The report said pressure from higher rates was concentrated in acquisitions made at elevated prices in 2021–2022. Some borrowers can no longer pay interest in cash and are adding it to their loans. Deals from those years accounted for 70% of debt subject to foreclosure in 2025–2026. The average time to exit has also extended to about seven years, from five to six years in 2010–2021.
Methods of returning capital without an outright sale have also expanded. Transfers of portfolio companies into new funds managed by the same sponsor accounted for 14% of private equity exit value in the first half of 2026, compared with 5% in 2020. Funds also borrow against their portfolios to make distributions. The newsletter argued that these arrangements can flatter cash-return figures while adding another layer of borrowing above company debt.
The report stopped short of declaring all buyouts in trouble. It said strong managers could adapt and smaller acquisitions outside heavily indebted software businesses could still perform. It also acknowledged the greater risks of venture investing at median performance levels, arguing that access to the top 5% of managers is central to capturing venture’s potential rewards.