Key Takeaways
- • PE firms globally hold a record $1.7 trillion in dry powder, intensifying competition for quality assets and driving US deal multiples from 9.6x in 2023 to 11.3x in 2024, settling at 10.9x in 2025.
- • Leading private equity firms are building proprietary subsector knowledge and deploying AI-powered deal screening to establish origination advantage before assets reach the open market, reducing reliance on traditional investment banker deal flow.
- • The conventional banker-dependent origination model leaves PE firms competing for identical limited opportunities with minimal competitive differentiation in an increasingly saturated deal environment.
- • A holistic approach combining deep market intelligence, relationship mapping, and data science capabilities enables top-tier firms to identify and move on sought-after opportunities faster than competitors.
Summary
The private equity market faces unprecedented structural challenges as capital abundance collides with asset scarcity. According to KPMG research, PE firms globally are sitting on a record $1.7 trillion in dry powder, creating intense downward pressure on deal availability while simultaneously driving valuations higher across quality assets. US private equity deal multiples reflect this dynamic: climbing from 9.6x EBITDA in 2023 to 11.3x in 2024, then moderating only marginally to 10.9x in 2025. This sustained elevation in multiples signals that competitive pressure remains acute despite modest normalization.
The traditional deal sourcing model—relying primarily on investment banker relationships and auction processes—has become strategically inadequate in this environment. By the time an asset reaches formal marketing, dozens of well-capitalized PE firms compete for the same opportunity, eliminating differentiation and forcing buyers to accept compressed returns. Recognizing this disadvantage, leading PE firms are systematically building proprietary origination capabilities centered on deep subsector expertise developed before assets hit the market.
Top-performing firms are implementing a multifaceted approach that combines three core elements: establishing proprietary knowledge in specific subsectors through sustained research and relationship building; deploying AI-powered deal screening and analysis tools to accelerate identification and evaluation of potential targets; and maintaining ongoing relationship networks with business owners, management teams, and referral sources independent of formal auction processes. This framework allows leading firms to develop conviction on opportunities early, move quickly on off-market deals, and maintain speed advantage throughout diligence.
KPMG's research identifies this shift as a fundamental repositioning of deal origination strategy—moving from a reactive, banker-dependent model to a proactive, intelligence-driven approach. Firms executing this transition effectively gain material edge in access to quality assets before competitive tension drives valuations to prohibitive levels. In a market where $1.7 trillion in capital chases limited opportunities, proprietary origination has evolved from a nice-to-have to a critical capability for maintaining deal economics and generating competitive returns.
The traditional deal sourcing model—relying primarily on investment banker relationships and auction processes—has become strategically inadequate in this environment. By the time an asset reaches formal marketing, dozens of well-capitalized PE firms compete for the same opportunity, eliminating differentiation and forcing buyers to accept compressed returns. Recognizing this disadvantage, leading PE firms are systematically building proprietary origination capabilities centered on deep subsector expertise developed before assets hit the market.
Top-performing firms are implementing a multifaceted approach that combines three core elements: establishing proprietary knowledge in specific subsectors through sustained research and relationship building; deploying AI-powered deal screening and analysis tools to accelerate identification and evaluation of potential targets; and maintaining ongoing relationship networks with business owners, management teams, and referral sources independent of formal auction processes. This framework allows leading firms to develop conviction on opportunities early, move quickly on off-market deals, and maintain speed advantage throughout diligence.
KPMG's research identifies this shift as a fundamental repositioning of deal origination strategy—moving from a reactive, banker-dependent model to a proactive, intelligence-driven approach. Firms executing this transition effectively gain material edge in access to quality assets before competitive tension drives valuations to prohibitive levels. In a market where $1.7 trillion in capital chases limited opportunities, proprietary origination has evolved from a nice-to-have to a critical capability for maintaining deal economics and generating competitive returns.
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