Key Takeaways
- • Global private equity deal value rose 19% year-over-year to $2.6 trillion in 2025, driven largely by larger transactions, even as the number of deals fell 9%, according to McKinsey & Co.
- • Buyout valuation multiples reached 11.8x Enterprise Value/EBITDA, the highest since 2022, as acquirers paid premium prices for durable assets.
- • Exit value climbed roughly 41% to $1.3 trillion in 2025, the second-highest year on record behind 2021's $1.72 trillion, though exit count declined 15%.
- • 70% of 300 LPs surveyed by McKinsey plan to maintain or increase private equity deployment this year.
- • Continuation vehicles and secondaries grew to $115 billion in 2025 from $35 billion in 2020, with McKinsey estimating 14% of sponsor-backed exits use them today and projecting 29% within five years.
Summary
After several years of sluggish returns, fewer deals and a growing stockpile of uninvested capital, private equity showed signs of recovery in 2025, according to research from consultant McKinsey & Co. Dealmaking increased and the initial public offering market began to reemerge. McKinsey cautioned, however, that the industry still faces significant structural headwinds. Alex Edlich, a senior partner in McKinsey's private capital practice, said the industry is "a very changed industry" and that conditions are "way more challenging" than before, with implications for deployment, exits, value creation, fundraising and general partner strategy.
The industry has underperformed public markets for a third consecutive year and distributions to limited partners continue to decline. Edlich added that geopolitical instability and artificial intelligence are compounding these pressures.
Deal value rose 19% to $2.6 trillion in 2025, largely because of larger transactions. Deals above $2.5 billion increased 72%, and deals above $500 million rose more than 51%, while the overall deal count fell 9%. McKinsey attributed the rebound in value to acquirers paying higher multiples. Buyout multiples reached 11.8x EV/EBITDA, the highest since 2022. Limited partners are competing for quality assets, and general partners are paying premiums for durability and downside protection. McKinsey also noted that 40% of dry powder has been available for two years or more. Buyout sizes grew without a matching increase in leverage because GPs are contributing more equity, reducing their reliance on debt to generate outsized returns.
LP deployment held steady, with 70% of the 300 LPs surveyed planning to maintain or increase private equity allocations this year. McKinsey quoted the report: "Conviction in private equity remains intact; what is changing is how LPs allocate, evaluate and engage." Exit value increased about 41% to $1.3 trillion, the second-highest annual total on record, although exit count fell 15%. Liquidity solutions have become more prominent. Continuation vehicles and secondaries reached $115 billion in 2025, up from $35 billion in 2020. McKinsey estimates 14% of sponsor-backed exits now run through continuation vehicles and expects that share to reach 29% in five years. Edlich said the stigma once attached to continuation vehicles has diminished among LPs.
The industry has underperformed public markets for a third consecutive year and distributions to limited partners continue to decline. Edlich added that geopolitical instability and artificial intelligence are compounding these pressures.
Deal value rose 19% to $2.6 trillion in 2025, largely because of larger transactions. Deals above $2.5 billion increased 72%, and deals above $500 million rose more than 51%, while the overall deal count fell 9%. McKinsey attributed the rebound in value to acquirers paying higher multiples. Buyout multiples reached 11.8x EV/EBITDA, the highest since 2022. Limited partners are competing for quality assets, and general partners are paying premiums for durability and downside protection. McKinsey also noted that 40% of dry powder has been available for two years or more. Buyout sizes grew without a matching increase in leverage because GPs are contributing more equity, reducing their reliance on debt to generate outsized returns.
LP deployment held steady, with 70% of the 300 LPs surveyed planning to maintain or increase private equity allocations this year. McKinsey quoted the report: "Conviction in private equity remains intact; what is changing is how LPs allocate, evaluate and engage." Exit value increased about 41% to $1.3 trillion, the second-highest annual total on record, although exit count fell 15%. Liquidity solutions have become more prominent. Continuation vehicles and secondaries reached $115 billion in 2025, up from $35 billion in 2020. McKinsey estimates 14% of sponsor-backed exits now run through continuation vehicles and expects that share to reach 29% in five years. Edlich said the stigma once attached to continuation vehicles has diminished among LPs.
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