Key Takeaways
- • Global private markets AUM is projected to grow from $15 trillion to $25 trillion by 2029 at approximately 10% annual growth, with 2025 flows reaching $1.4 trillion, up over 10% from 2024.
- • Institutional investors have shifted performance measurement priorities, with DPI (distributions to paid-in capital) rising from 8% to 21% as a critical metric between 2022 and 2025, reflecting pressure to prioritize cash distributions over IRR alone.
- • PE deal activity exceeded $1 trillion in value during 2025 for only the second time in history, driven by 150 megadeals valued at nearly $570 billion, signaling robust market activity despite structural shifts.
- • Evergreen vehicles are experiencing rapid growth, with over 350 launched since 2019 and wealth-focused evergreen AUM projected to expand from $430 billion today to $1.1 trillion by 2029 (20% CAGR), creating alternative exit pathways in secondary markets.
- • Future private markets growth will be driven by expansion into new asset classes, increased reliance on secondary markets, and innovative liquidity solutions rather than scale alone.
Summary
The private markets landscape is undergoing fundamental structural transformation in 2026, driven by institutional investor responses to recent market challenges that are now reshaping asset allocation, performance measurement, and capital deployment strategies. Global private markets AUM stands at approximately $15 trillion and is on pace to reach $25 trillion by 2029, growing at roughly 10% annually. Global flows totaled $1.4 trillion in 2025, representing over 10% growth compared to 2024, yet this expansion masks a significant pivot in how capital is being deployed and evaluated.
The most consequential shift concerns performance measurement. Recent US PE buyout vintages have delivered distributions at roughly half the levels of prior cycles, placing acute focus on cash returns. According to McKinsey's LP survey, DPI (distributions to paid-in capital) emerged as a top-three priority metric for institutional allocators, rising from 8% to 21% in importance between 2022 and 2025. This represents a fundamental recalibration away from IRR-centric evaluation toward income-generating strategies, shorter J-curves, and assets with definitive exit timelines. This metric shift is directly influencing capital allocation toward strategies offering clearer distributions and faster realization of invested capital.
Private equity deal activity remained robust in 2025, with PE deal value exceeding $1 trillion for only the second time in market history. This strength was predominantly driven by 150 megadeals totaling nearly $570 billion, indicating that deal momentum persisted despite the broader recalibration in investor preferences. The concentration of large transactions reflects continued appetite from leading sponsors for transformational opportunities.
The investor base itself is diversifying materially. Over 350 evergreen vehicles have launched since 2019, addressing investor demand for continuous capital access rather than traditional drawdown fund structures. Wealth-focused evergreen AUM is projected to expand from $430 billion currently to $1.1 trillion by 2029, representing a 20% compound annual growth rate. While evergreen vehicles currently represent a small fraction of total drawdown fund capital, their expanding deployment could materially strengthen secondary markets and establish meaningful alternative exit pathways for primary fund investments.
Going forward, private markets growth will diverge from historical patterns. Rather than growth driven predominantly by capital scale, future expansion will be characterized by movement into adjacent asset classes, greater reliance on secondary market transactions, and development of innovative liquidity mechanisms that address the cash return priorities now dominating institutional LP decision-making.
The most consequential shift concerns performance measurement. Recent US PE buyout vintages have delivered distributions at roughly half the levels of prior cycles, placing acute focus on cash returns. According to McKinsey's LP survey, DPI (distributions to paid-in capital) emerged as a top-three priority metric for institutional allocators, rising from 8% to 21% in importance between 2022 and 2025. This represents a fundamental recalibration away from IRR-centric evaluation toward income-generating strategies, shorter J-curves, and assets with definitive exit timelines. This metric shift is directly influencing capital allocation toward strategies offering clearer distributions and faster realization of invested capital.
Private equity deal activity remained robust in 2025, with PE deal value exceeding $1 trillion for only the second time in market history. This strength was predominantly driven by 150 megadeals totaling nearly $570 billion, indicating that deal momentum persisted despite the broader recalibration in investor preferences. The concentration of large transactions reflects continued appetite from leading sponsors for transformational opportunities.
The investor base itself is diversifying materially. Over 350 evergreen vehicles have launched since 2019, addressing investor demand for continuous capital access rather than traditional drawdown fund structures. Wealth-focused evergreen AUM is projected to expand from $430 billion currently to $1.1 trillion by 2029, representing a 20% compound annual growth rate. While evergreen vehicles currently represent a small fraction of total drawdown fund capital, their expanding deployment could materially strengthen secondary markets and establish meaningful alternative exit pathways for primary fund investments.
Going forward, private markets growth will diverge from historical patterns. Rather than growth driven predominantly by capital scale, future expansion will be characterized by movement into adjacent asset classes, greater reliance on secondary market transactions, and development of innovative liquidity mechanisms that address the cash return priorities now dominating institutional LP decision-making.
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