Private equity has been in a low-grade slowdown for years, locked in a Groundhog Day loop. “You hear it every year now,” said Kyle Walters, PitchBook analyst. “You heard it in 2023, where private equity said: ‘It could come back this year.’ Then, you get to 2024, and 2024 is going to be a different year. Then, you get to 2025 and 2025 was a bit better, and people say ‘maybe this is the year.’” U.S. private equity—with more than $3 trillion in assets under management—has been locked in a cycle of geopolitical uncertainty and possible rate hikes, along with the challenges of a rapidly concentrating market with limited exits. This was true in Q3 2026: Exit value for the quarter was down 14.1% year-over-year and deal value was down 13.6% year-over-year, according to PitchBook data.  “AUM for the asset class isn’t growing nearly like it used to,” said Walters. “A 12% annual growth rate over the last ten, 15 years. We’re closer to half that now… This is the new norm, putting capital to work with headwinds in the market, and bringing companies to market with unresolved issues.”  Fundraising, Walters pointed out, is especially tough and has “definitely gotten harder over the last 18 to 24 months,” he said.  “Part of that is because of limited exits,” Walters told Fortune. “If you’re not getting distributions from your GPs, you have less capital to deploy, so you have to concentrate on fewer managers. That’s what we’re seeing take shape. But that’s not to say there are fewer managers raising capital. It’s that fewer managers are crossing the finish line, they’re fighting over scraps of the fundraising pie.” This isn’t true of everyone, of course. The biggest firms remain massive. Take KKR, which hit its $300 billion fundraising goal (originally slated for three years, the raise took 30 months). However, a possible set of new interest rate hikes (even before the end of the year) could throw the sector into even more turmoil.  “[If there’s a rate hike] instead of some gradual recovery I’ve been imagining, you probably get a Q4 that looks a lot like Q3,” said Walters. “That’s not bad, it’s not at 2025 levels but still above the doldrums you saw in 2022 and 2023 where activity wasn’t really happening at all. PE has penciled a lot of this in, so they’ve kind of broadly accepted that there’s a rate hike coming. So, if it doesn’t, it’s a pleasant surprise. You’ll still see transactions take place—it’s just not going to be at the scale we hoped for coming into the year.”  As the weather forecast in Groundhog Day goes: “It’s going to be cold, it’s going to be gray, and it’s going to last you the rest of your life.”  See you tomorrow, Allie GarfinkleX: @agarfinksEmail: [email protected] Submit a deal for the Term Sheet newsletter here. Joey Abrams curated the deals section of today’s newsletter. This story was originally featured on Fortune.com ...read more read less