There is some variety, but a very common model in Private Equity is to acquire an asset (a company), and fund that acquisition through either equity or debt.

The ability to purchase often comes in through either Private fund investments or via Debt.

* Private funds are most often drawdown funds (Private equity funds, VC Funds, Real Estate Funds, etc.). These are managed funds not available on public markets, typically require a substantial commitment of funds, and generally in return these investors can expect a significant return on their capital.

* Debt was a very popular way to finance these purchases as well when interests rate were lower, and you expect to sell the asset/company before the debt comes due. Basically cheap money made this feasible/possible.

The expectations are typically 5-10 years for both of these funding models; with private funds, they expect to run for X years, long enough to acquire the assets, clean them up, and resell them at a profit. For debt, the expectation was to sell before the debt came due, along the same timeline.

So that's the backdrop.

The primary concern here is around investments in tech and SaaS companies impacting both models. SaaS has contracted quite a bit with pressure from AI and valuations are lower.

The article is focused on the debt financed path; PE hasn't been able to sell companies as quickly as they would like or at a price they would like, so they are sitting on the books. And for companies purchased using a combination or private funds, they have companies they can't unload for the price they would like. The funds that are in this state where they cannot sell remaining portfolio companies without realizing losses are called zombie funds.