The challenge of raising a new fund isn't easing up any time soon, especially if more M&A professionals are in agreement that limited partners (LPs) are now looking to put more money in fewer funds.

"It's a problem," says Joe Burkhart, a managing director at Saratoga Investment Advisors, which oversees the portfolio of business development company Saratoga Investment Corp. (NYSE: SAR). The number of what Burkhart calls "zombie" firms is escalating.

Analagous to the flesh-eating creatures who endanger the lives of humans in movies and video games, these PE players are spooking LPs.

The reason is because too many firms are sitting on assets and have inactive funds. The "undead" inspired nickname comes from the fact that they still own portfolio companies, but have exhausted most, if not all, of their capital and can't raise new money, often because of lackluster returns to their investors.

With more PE firms generating mediocre returns to LPs and unable to raise new funds, Burkhart says, "there will be fewer private equity firms tomorrow than there are today."