Annual private equity insights and outlook: Deals regain momentum

Private equity activity continued to gradually rise in 2025 as the amount of capital deployed into new deals and the number of portfolio company investments exited both increased over prior-year totals.

The aggregate value of private equity and venture capital entries globally increased 20% to $468.51 billion in 2025 from $390.08 billion in 2024, according to S&P Global Market Intelligence data. It was the second consecutive annual increase in announced deal value.

Private equity exits also increased in 2025, totaling 3,149 globally, marking a 5.4% increase from the 2024 total, according to Market Intelligence data.

The back-to-back annual increases in capital deployment and exit volume followed a two-year downturn for both of those key private equity metrics, and they indicate the private equity investment cycle is revving up again. But that acceleration has come at a cost: even as the number of exits increased in 2025, the announced value of those deals decreased 21.2% year-over-year, generating lower profits for fund managers and their investors.

'Swollen portfolios'

Fund managers who delayed deals during the downturn are now exiting portfolio companies at lower-than-expected valuations just to keep the private equity flywheel spinning, said Steven Siesser, a managing partner at Lowenstein Sandler and chair of the law firm's private equity practice.

"By and large, values are down except for the handful of hot sectors," Siesser said.

Exits remain critical to fundraising. They trigger a distribution of profits to private equity fund investors, known as limited partners. Limited partners typically recycle some of those profits into new fund commitments, and the scarcity of exits during the industry’s recent downturn continues to hamper private equity fundraising.

Private equity portfolio company holding times extended across a variety of sectors in 2025.

"There are still a lot of swollen portfolios. I’m aware of funds who have five, six, eight, 10 portfolio companies they've had for years and they haven't been able to exit," Siesser said.

The fundraising efforts of private equity and venture capital firms fell 11.0% to $490.81 billion in 2025 from $551.16 billion in 2024, according to data from With Intelligence, part of S&P Global Market Intelligence.

Capital flows

Not every firm is struggling to raise capital. The 10 largest funds to close in 2025 gathered a combined $161.90 billion in capital commitments, or just over one-third of the industry's annual fundraising haul, according to With Intelligence data.

During the slowdown in exits, private equity investors grew more cautious and cut back on the number of funds they work with, placing the bulk of their commitments with large, proven managers. Law firm Morrison Foerster predicted the trend will persist into 2026.

"Unless exit activity picks up, the market is likely to see further consolidation, leaving experienced managers with the bulk of new commitments while newer, emerging managers struggle with extended fundraising periods," according to the firm's 2026 private equity outlook report.

Meanwhile, the large managers benefitting from limited partners' flight to quality are using the investor capital to make big M&A deals. Private equity megadeals worth at least $5 billion surged in 2025 to a record $311.08 billion, according to Market Intelligence.