Since the economic downturn of 2008, fundraising has become increasingly difficult for private equity firms, and many firms are not expected to meet their fundraising goals. According to Bain & Company's Global Private Equity Report 2013, about 35 percent of the buyout shops in North America and Europe haven't raised a fund since 2008 and have reached a point when they will need to raise their next fund. Many are already on the fundraising trail and aren't having great success. London-based data company Preqin estimates there are 1,200 private equity zombie funds, or funds where the general partner is managing the fund portfolio without making distributions and hasn't raised a follow-on fund after 2006. Twenty-three percent of PE firms actively raising capital have been in the market trying to raise a fund for two years or more, according to Preqin.

The limited partner (LP) community doesn't have the capacity to accommodate all funds in the market. By mid-2012, two-thirds of the LPs were bumping up against their ceilings for private equity allocations, according to Preqin. Further complicating matters, the LPs' large commitments to the asset class before the downturn and the private equity firms' lack of returns from exiting portfolio companies make investors hesitant to increase their PE allocations.

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