While the global financial markets have experienced volatility over recent years, private equity is poised for an unprecedented resurgence, with projections indicating approximately 10,000 deals and $1.0 trillion in aggregate transaction value for 2025, potentially eclipsing the record-setting activity observed in 2021. The first half of 2025 has already demonstrated remarkable momentum, with deal values reaching their highest levels since Q2 2022, driven by several significant transactions that have reinvigorated market confidence.
Private equity’s resurgence is set to break records in 2025, fueled by renewed market confidence and significant deal momentum.
This acceleration comes after a period of cautious deployment, as large PE deals exceeding $500 million in enterprise value have increased substantially following two consecutive years of decline. Private equity firms announced or completed 18 megadeals valued at $5 billion or above in 2024, more than double the prior-year total.
The capital environment supporting this boom is substantial, with over 18,000 private capital funds currently seeking a combined $3.3 trillion, creating competitive dynamics for quality assets. Despite near-record levels of dry powder intensifying the hunt for deployment opportunities, traditional PE fundraising vehicles experienced a 24% year-over-year decline in 2024, marking the third consecutive annual contraction. This paradoxical situation has created mounting pressure on financial sponsors to return capital to limited partners as funds mature and exit requirements escalate, contributing to a notable surge in sponsor-to-sponsor transactions. Firms are under increasing pressure to deploy approximately $1.2T in buyout dry powder, some of which is now over four years old. Many investors are considering alternative markets like Singapore, where the property market growth of 8.6% in 2023 has attracted international capital despite cooling measures.
Regulatory tailwinds are expected to further catalyze deal activity, with the incoming U.S. administration signaling a softer regulatory climate that will likely encourage M&A transactions throughout 2026. This shift follows a period of heightened antitrust scrutiny that had previously dampened deal flow, though the SEC continues to prepare stricter rules on disclosures, particularly regarding fees, performance metrics, and ESG claims. The environment for strategic exits has markedly improved, with 2024 witnessing the first significant uptick in distributions to limited partners since 2015, primarily through strategic sales that have substantially increased liquidity events for maturing funds.
Sector specialization remains paramount, with energy, technology, and healthcare attracting significant private equity attention due to their transformation potential and secular growth trajectories. As competition intensifies, PE sponsors are increasingly pursuing creative deal structures to maximize returns, with a notable shift toward direct lending and private credit arrangements.