Key Takeaways
- • Construction emerged as private equity's strongest performer in 2025, posting 453 deals valued at $31.4 billion—a 52% increase in deal count and 21% increase in capital deployed compared to the 2021-2024 average of 299 deals and $25.9 billion.
- • Construction technology attracted disproportionate PE interest, capturing $4.1 billion in 2025 investment versus $1.2 billion in 2024, a 242% year-over-year increase, driven by infrastructure spending and the datacenter construction boom.
- • Engineering services also accelerated, reaching $20.9 billion in PE deployment in 2025 versus a $18.5 billion historical average, benefiting from delayed effects of the Inflation Reduction Act and Infrastructure Investment and Jobs Act alongside declining interest rates.
- • Physician practice management collapsed as a PE target, with deal value declining approximately 50% relative to the 2022-2024 average, alongside weakness in consumer staples, consumer packaged goods, and select aerospace & defense segments.
- • PE sponsors demonstrated improved operational sophistication in construction by successfully combining assets to enhance margins and increase scale, suggesting structural competitive advantages emerging in the sector.
Summary
Private equity capital demonstrated pronounced sectoral rotation in 2025, with construction-related investments substantially outpacing broader market activity according to PitchBook's inaugural US Private Equity Momentum Report. The construction sector recorded 453 deals totaling $31.4 billion in deployed capital last year, representing material acceleration from the preceding four-year average. This performance differential reflects both quantitative growth—52% more deal count—and qualitative capital concentration, suggesting PE firms have identified durable competitive advantages within the construction ecosystem.
Within construction, construction technology proved exceptional, attracting $4.1 billion of investment in 2025 compared to $1.2 billion the prior year. Engineering services similarly demonstrated strength at $20.9 billion deployed versus a historical average of $18.5 billion. PitchBook's analysis attributes this concentration to multiple structural tailwinds: the delayed deployment phase of the Inflation Reduction Act and Infrastructure Investment and Jobs Act, accelerating datacenter construction demand, selective reshoring activity, and the beneficial impact of declining interest rates on project economics. Additionally, PE sponsors have developed operational proficiency in combining construction platform investments, a capability that directly enhances margin profiles and competitive positioning through improved scale.
Conversely, several healthcare and industrial segments underperformed PE expectations. Physician practice management deal value declined by approximately half relative to its 2022-2024 average, marking a significant retrenchment in what had been an active PE subsector. Other lagging segments included consumer staples, consumer packaged goods, and portions of aerospace & defense—sectors that failed to generate sufficient deal flow or attractive risk-adjusted returns to capture significant PE capital allocation.
The divergence between construction's momentum and healthcare's contraction underscores PE's increasingly selective capital deployment strategy. Rather than rotating broadly across sectors, institutional capital concentrated in areas offering tangible macroeconomic tailwinds, operational leverage opportunities, and demonstrated management team capabilities. This sectoral concentration patterns suggests PE firms are prioritizing quality of deployment over deal velocity heading into 2026.
Within construction, construction technology proved exceptional, attracting $4.1 billion of investment in 2025 compared to $1.2 billion the prior year. Engineering services similarly demonstrated strength at $20.9 billion deployed versus a historical average of $18.5 billion. PitchBook's analysis attributes this concentration to multiple structural tailwinds: the delayed deployment phase of the Inflation Reduction Act and Infrastructure Investment and Jobs Act, accelerating datacenter construction demand, selective reshoring activity, and the beneficial impact of declining interest rates on project economics. Additionally, PE sponsors have developed operational proficiency in combining construction platform investments, a capability that directly enhances margin profiles and competitive positioning through improved scale.
Conversely, several healthcare and industrial segments underperformed PE expectations. Physician practice management deal value declined by approximately half relative to its 2022-2024 average, marking a significant retrenchment in what had been an active PE subsector. Other lagging segments included consumer staples, consumer packaged goods, and portions of aerospace & defense—sectors that failed to generate sufficient deal flow or attractive risk-adjusted returns to capture significant PE capital allocation.
The divergence between construction's momentum and healthcare's contraction underscores PE's increasingly selective capital deployment strategy. Rather than rotating broadly across sectors, institutional capital concentrated in areas offering tangible macroeconomic tailwinds, operational leverage opportunities, and demonstrated management team capabilities. This sectoral concentration patterns suggests PE firms are prioritizing quality of deployment over deal velocity heading into 2026.
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