U.S. Private Equity Market Recap - March 2025

Read our latest insights into the U.S. private equity market. We cover monthly deal activity and size, fundraising, exits, leveraged loans, and a look ahead. To receive our private equity thought leadership, please join our mailing list.

Key Takeaways

• Deal activity: U.S. PE dealmaking had a slower start in 2025. YTD deal numbers through February were below those for the same period in the past five years.
  
• Unlocking liquidity: Providing liquidity and returning capital remains a top priority for the industry in 2025. While exits have started to pick up, firms and investors are also increasingly taking advantage of alternative liquidity solutions.
  
• Secondaries: Secondaries have emerged as a popular strategy to solve liquidity challenges and have experienced significant growth over the past couple of years. Both GP- and LP-led secondaries are expected to continue growing in the year ahead. 

U.S. PE Deal Activity

• Deal activity: The first two months of 2025 have seen low levels of U.S. PE deal activity. Deal counts through February are lower than YTD deal counts for the same period in the past 5 years. 
• Deal size: The proportion of deals over both $500m and $1bn increased for the 2^nd consecutive year in 2024. However, in the first two months of 2025, the proportion of deals under $500m grew. 

Fundraising Trends

• Fundraising: After U.S. PE fundraising dropped for a 3^rd consecutive year in 2024, fundraising remains slow with 81 funds closing YTD through February in 2025. 
• Funds in the market: Preqin data shows that fund of funds, buyout, co-investment, and growth strategies are most represented in the market. In terms of fund size, buyouts are targeting the largest amount of capital, followed by growth. 
• Co-investment opportunities: Offering co-investment opportunities has been one way for GPs to attract capital in this competitive fundraising environment. 

Liquidity

• Exit activity: While exits increased in 2024, the pickup was not enough to meaningfully solve any of the industry’s liquidity challenges.
• Aging portfolio companies: GPs face pressure to exit and return LP capital as almost one-third of U.S. buyout-backed companies have been held for 5+ years. 
• Liquidity alternatives: The industry has been utilizing alternative solutions such as minority sales, dividend recaps, secondaries, and NAV loans to help provide liquidity. 

Secondaries 

• Growth in secondaries: PE secondaries have become a popular liquidity solution for both GPs and LPs. As a result, the PE secondaries market has grown rapidly.
• Secondary transactions: Secondary PE trades hit a record in 2024, reaching over $150bn according to reports from both Jefferies and Lazard. Both firms see secondaries poised for continued growth and innovation throughout 2025.

U.S. Middle Market Lending 

• Loan volume: U.S. middle market loan volume was up 49% in 2024 to $297bn. 
• LBO lending: U.S. mid-market LBO lending reached $55bn in 2024, up 66% YoY. Direct lending made up 90% of LBO lending in 2024, up from only 36% in 2014. 
• Equity contributions: Total equity contributions on middle market LBO deals fell to 55% in Q4 2024, below the five-year average of 59%. 

Public PE Firm Q4 2024 Earnings Recap

• Pick up in realizations: In Q4 2024 earnings calls, firms highlighted improvements in PE realizations and expressed a positive outlook on monetization prospects in 2025.
• Growth and strategy: Firms shared various growth expansion strategies and highlighted pushes into credit, insurance, private wealth, and infrastructure.

Q4 Earnings Commentary

“I think when we were talking at the end of last year, I think the perspective was, heading into 2025, you’d see an improved M&A environment by a lot of the transactions that maybe didn’t get done in 2023 and then maybe got put on hold in late 2024 would come back to the market. That is still very much our expectation that you’re going to see the M&A market pick up this year. We expect there’s going to be a lot of noise, no doubt. But as we look through the noise and try to figure out the signal, there’s nothing that we’re seeing that changes that perspective as we sit here today. And remember, for us, volatility creates opportunities. We are expecting there will be some volatility, but we think that will make the investment environment even more interesting for us. And so we remain optimistic” 

– Scott Nuttall, Co-CEO (February 4, 2025) 

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“Our business is going to be driven by four really large fundamental changes taking place in the marketplace. The first is this notion of a global industrial renaissance. We're seeing it literally every day in the U.S., in particular…The second big driver of our business is retirement…The third, recall that our entire industry was built out of the alternatives bucket of institutional clients. As all of you know from the past few years, individuals have the potential to be as large as institutions in the same sorts of products, and they will not take anywhere near 40 years to get to that size. And finally, and I think personally the most important driver of our business, is an entire rethink of public and private… And if people are not watching closely, the largest asset manager, the traditional asset manager in our industry, has delivered a wakeup call to their entire peer set that private is going to be an important part of client solutions going forward.”

– Marc Rowan, CEO and Co-Founder (February 4, 2025) 

A Look Ahead

• Private equity investor base: Bain estimates that capital from sovereign wealth funds and individual investors will contribute to 60% of future AUM growth by 2033. 
  • Retail investors: Positioning to gain capital from wealthy retail investors is a key strategic priority and firms will continue these efforts in the months and year to come. 
    
  • Public and private market convergence: Efforts to target retail investors has led to the growing convergence of public and private markets. Wealth management firms are looking to create access to alternatives, and alternative asset managers are creating products to give individuals access to private markets.
• Private credit growth and consolidation: Following years of rapid growth, private credit has started to experience consolidation. 
  • Consolidation: Capital is increasingly concentrated among the largest firms, as evidenced by the top 50 private credit-focused firms raising 91% of the capital in 2024. Additionally, large-scale M&A deals, such as BlackRock’s acquisition of private credit manager HPS, are contributing to industry consolidation.  
    
  • Poised for future growth: Industry analysts continue to expect growth in private credit through both core markets of direct lending and other related areas such as asset-backed financing. McKinsey estimates the total addressable size of the U.S. private credit market is over $30tn, up from $2.1tn in 2023. 
    
• Tariffs: The Trump administration’s tariff policy—25% on imports from Canada and Mexico and 10% on those from China—recently went into effect and caused disruption to markets. While enacted, the tariff policy remains fluid, and investors will need to continue to monitor for potential changes. Potential impacts for the PE industry will range based on sector, investor and investment type, and in relation to the broader economy.
  • Sectors: A wide range of sectors, including consumer goods, electronics, manufacturing, agriculture and energy, may be affected.  
    
  • Investor type: Impact will differ among portfolio companies. However, businesses with supply chains connected to Canada, Mexica, or China are more likely to see valuation discounts or postponed exits. 
    
  • Macroeconomic: The imposed tariffs will impact the global economy by shifting global trade dynamics and they may trigger another bout of inflation or lead to other macroeconomic headwinds.