Large deals set to drive private equity leveraged buyout value past 2024 levels

The deal value of private equity leveraged buyouts in 2025 is on track to surpass 2024's levels.

Through the second quarter, leveraged buyout transactions totaled $150.35 billion, or about 70% of the 2024 total, according to S&P Global Market Intelligence.

The volume of such deals, however, was not as buoyant, with 696 deals at the end of June, or about 49% of the 1,416 transactions recorded during full year 2024.

Eric Schwartzman, head of global law firm Baker McKenzie LLP's private equity group in California, said larger deals would boost the transaction value in 2025, though deal count could be flat or remain around the levels of prior years.

Private equity megadeals — transactions worth at least $5 billion — are rising rapidly in 2025 and are pacing to set a record high, according to Market Intelligence data.

The rise in larger deals can be attributed to two main factors: the increased activity in private credit, which provides readily available financing, and the significant amount of dry powder that has been raised and needs to be deployed. Additionally, Schwartzman said the lack of exits over the past few years has created a pent-up demand.

"Without exits, there can't be distributions to investors. Without distributions, it's difficult to make a capital call to ask for more money when you haven't returned the first chunk of money," Schwartzman said.

Schwartzman also noted that sellers are beginning to adjust their expectations regarding valuations, leading to a more balanced environment for transactions between buyers and sellers. This shift has resulted in an increase in larger deals, particularly in the form of take-privates and carve-outs, although the overall deal count remains unchanged.

"As a result, we'll see more consortium deals where private equity funds are teaming up with one another or private equity funds are bringing in strategics because these very large deals require obviously very large equity checks. And so they share the risk and the operations and ultimately, the exit," Schwartzman said.

Michael Occi, CEO of Morgan Stanley Direct Lending Fund, added that in the medium term, he believes "a slow release of pent-up M&A demand will continue to materialize, with private equity being an important subset of financing."

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Private equity's share of leveraged buyouts

Private equity accounted for more than 54% of the 1,286 global leveraged buyouts as of the second quarter, the highest percentage since 2020, according to Market Intelligence data. Private equity's share of leveraged buyouts has been increasing since 2023.