Bank of America Launches Team to Aid Private Equity Exits | PYMNTS.com

Bank of America is establishing a dedicated team to assist private equity firms in navigating an increasingly complex market for exiting investments. The new Private Capital M&A Group, announced internally on Wednesday, aims to streamline the process of selling portfolio companies as the landscape for initial public offerings and traditional sales shifts.

The move comes at a time when private equity firms are holding onto assets for longer periods, grappling with a record backlog of unsold companies. According to Bloomberg, the pace of sponsor exits has been “structurally low” in recent years, necessitating a rebound and a greater share of M&A activity from these firms. Eamon Brabazon, co-head of global mergers and acquisitions at Bank of America, told Bloomberg that sponsors will account for a greater share of the M&A pie going forward.

The Weight of Unsold Assets

The challenges facing private equity aren’t new. Throughout 2025, firms saw returns to investors decline for the fourth consecutive year, with a staggering $3.8 trillion in assets remaining unsold. This “dry powder,” as it’s known in the industry, represents capital that could be reinvested or returned to investors, but is currently tied up in businesses awaiting a sale. Despite a 44% increase in deal value to $904 billion last year compared to 2024, this influx did little to alleviate the pressure on firms’ cash reserves. Total transaction volume actually decreased by 6%.

The difficulty in raising new funds has compounded the problem. Even offering investors unprecedented incentives hasn’t fully unlocked capital, as higher interest rates and sluggish dealmaking have hampered the ability to offload aging investments. In June 2025, reports indicated that private equity groups were holding approximately $1 trillion in unsold assets – capital that would typically be distributed to investors in a healthy market. Geopolitical turmoil and fluctuating tariff policies have further eroded company valuations, prompting firms to hold onto their portfolio businesses for extended periods.

How Bank of America’s New Team Will Operate

The Private Capital M&A Group will leverage Bank of America’s existing resources to facilitate exits for private equity firms. Even as the specific strategies haven’t been detailed publicly, the bank is positioned to offer a full suite of services, including advisory work, capital markets expertise and access to potential buyers. This holistic approach is designed to address the multifaceted challenges firms face when attempting to monetize their investments.

The timing of this launch is strategic. The IPO market, traditionally a key exit route for private equity, has been volatile. Economic uncertainty and fluctuating investor sentiment have made it hard to predict when conditions will be favorable for public offerings. This has increased the reliance on alternative exit strategies, such as sales to strategic buyers or other financial sponsors – areas where Bank of America’s M&A expertise can be particularly valuable.

Impact on the Broader Market

The formation of this team at Bank of America signals a broader recognition within the financial industry of the challenges facing private equity. It suggests that other banks may follow suit, creating specialized groups to cater to the unique needs of firms seeking to exit investments. This increased focus on facilitating exits could, in turn, lead to a more active M&A market, providing liquidity for private equity firms and potentially unlocking value for investors.

However, the success of this initiative will depend on a number of factors, including the overall economic climate, interest rate movements, and geopolitical stability. Recent volatility in the private credit industry, as highlighted by Bloomberg, also adds a layer of complexity. While Bank of America analysts have defended asset managers, arguing that current conditions don’t mirror the 2008 financial crisis, the situation underscores the need for careful risk management and due diligence in any M&A transaction.

The Role of Tariffs and Interest Rates

The challenges facing private equity are not solely attributable to market conditions. Policy decisions, such as the White House’s approach to tariffs, have also played a significant role. Uncertainty surrounding trade policy has created headwinds for dealmaking, as it makes it more difficult to assess the long-term value of potential acquisitions. Similarly, rising interest rates have increased the cost of borrowing, making it more expensive for private equity firms to finance acquisitions and potentially dampening investor enthusiasm.

These factors have contributed to a situation where private equity firms are holding onto assets for longer periods, waiting for more favorable conditions to emerge. The formation of Bank of America’s Private Capital M&A Group is a response to this reality, offering firms a dedicated resource to help them navigate these challenges and find creative solutions for exiting their investments.

What to Expect in the Coming Months

Bank of America’s new team is expected to be fully operational in the coming weeks. The initial focus will likely be on assessing the portfolios of existing private equity clients and identifying potential exit opportunities. The bank will also be actively marketing its services to new clients, emphasizing its ability to provide tailored solutions for complex M&A transactions. The team’s success will be measured not only by the number of deals it closes, but also by its ability to generate attractive returns for its clients and contribute to a more liquid and efficient private equity market. Bloomberg’s reporting suggests a proactive approach to a shifting market dynamic.

Looking ahead, the performance of the Private Capital M&A Group will be closely watched by the broader financial industry. It could serve as a bellwether for the health of the private equity market and provide insights into the evolving strategies firms are employing to navigate a challenging environment.