Key Takeaways
- • Construction sector emerged as private equity's strongest performer in 2025, reaching 453 deals and $31.4 billion in capital deployment—a significant jump from the 2021-2024 average of 299 deals and $25.9 billion annually.
- • Construction technology was the standout subsector, attracting an estimated $4.1 billion in PE investment in 2025 compared to $1.2 billion in 2024, representing a 242% year-over-year increase.
- • Engineering segment maintained robust momentum, securing $20.9 billion in PE investment in 2025 versus the 2021-2024 average of $18.5 billion, driven by infrastructure and datacenter construction demand.
- • Physician practice management and healthcare services faced headwinds, with deal value for physician practices declining by approximately 50% relative to the 2022-2024 average, signaling a marked shift in PE capital allocation away from traditional healthcare.
- • Multiple macroeconomic tailwinds are fueling construction PE activity, including delayed impact from the Inflation Reduction Act and Infrastructure Investment and Jobs Act, the datacenter construction boom, reshoring trends, and declining interest rates.
Summary
The construction sector dominated private equity deal activity in 2025, establishing itself as the market's clear winner as capital rotation away from underperforming segments accelerated. According to PitchBook's inaugural US Private Equity Momentum Report, construction attracted 453 deals totaling $31.4 billion in PE capital deployment last year—a substantial 51% increase in deal count and 21% increase in capital volume relative to the 2021-2024 baseline average of 299 deals and $25.9 billion annually.
Within the construction ecosystem, construction technology emerged as the breakout performer, capturing investor attention with $4.1 billion in estimated PE investment during 2025, nearly tripling from $1.2 billion in 2024. Engineering also demonstrated sustained strength, with PE firms deploying $20.9 billion into the segment compared to the historical average of $18.5 billion. PitchBook's analysts attribute this concentration of capital to converging structural factors: the lagged effects of federal stimulus packages, particularly the Inflation Reduction Act and Infrastructure Investment and Jobs Act; accelerating demand for datacenter construction supporting artificial intelligence infrastructure; domestic reshoring initiatives; and the favorable impact of declining interest rates on project economics and financing availability. The report also notes that PE firms are developing enhanced operational capabilities in construction asset consolidation, positioning the sector for continued capital inflows as buyers recognize margin improvement and scale-building opportunities within fragmented markets.
Conversely, several traditional PE strongholds experienced significant capital retreat in 2025. Physician practice management companies saw deal values collapse by roughly 50% relative to their 2022-2024 average, reflecting broader skepticism around healthcare services consolidation. Consumer staples, consumer packaged goods, and select aerospace and defense subsectors also lagged, indicating a pronounced shift in PE allocator priorities away from mature, defensive segments toward infrastructure-linked and technology-enabled construction opportunities. This sectoral divergence underscores the market's recalibration toward thematic tailwinds and away from segments facing margin pressure or regulatory uncertainty.
Within the construction ecosystem, construction technology emerged as the breakout performer, capturing investor attention with $4.1 billion in estimated PE investment during 2025, nearly tripling from $1.2 billion in 2024. Engineering also demonstrated sustained strength, with PE firms deploying $20.9 billion into the segment compared to the historical average of $18.5 billion. PitchBook's analysts attribute this concentration of capital to converging structural factors: the lagged effects of federal stimulus packages, particularly the Inflation Reduction Act and Infrastructure Investment and Jobs Act; accelerating demand for datacenter construction supporting artificial intelligence infrastructure; domestic reshoring initiatives; and the favorable impact of declining interest rates on project economics and financing availability. The report also notes that PE firms are developing enhanced operational capabilities in construction asset consolidation, positioning the sector for continued capital inflows as buyers recognize margin improvement and scale-building opportunities within fragmented markets.
Conversely, several traditional PE strongholds experienced significant capital retreat in 2025. Physician practice management companies saw deal values collapse by roughly 50% relative to their 2022-2024 average, reflecting broader skepticism around healthcare services consolidation. Consumer staples, consumer packaged goods, and select aerospace and defense subsectors also lagged, indicating a pronounced shift in PE allocator priorities away from mature, defensive segments toward infrastructure-linked and technology-enabled construction opportunities. This sectoral divergence underscores the market's recalibration toward thematic tailwinds and away from segments facing margin pressure or regulatory uncertainty.
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