Key Takeaways
- • Private equity deal value reached a record US$310bn in Q3 2025, according to the Simmons & Simmons outlook, as activity rebounded from a cautious first half shaped by tariff concerns and rate uncertainty.
- • Preqin data cited in the report show PE exit values up 69% year over year in the first half of 2025, with exit counts up 18%.
- • Continuation funds accounted for roughly a fifth of PE sales in 2025, about $105bn according to Raymond James, up from 12-13% the prior year; 2026 is expected to set new records.
- • The sponsor-owned exit backlog is larger in value, count, and share of portfolio companies than at any point in two decades, creating pressure on LP liquidity and marks.
- • Private markets are projected by Preqin to grow from about $13tn to more than $20tn by 2030, while fundraising timelines have lengthened to a median 22 months.
Summary
Simmons & Simmons characterises 2025 as a year marked by caution driven by economic uncertainty, geopolitical tensions and trade wars, but with an overall trend toward gradual stabilisation. Early optimism gave way to caution as tariff concerns and interest rate uncertainty weighed on sentiment. Conditions improved by mid-year, and private equity activity surged in Q3 2025 to a record US$310bn in deal value, supported by moderating inflation across most G20 economies and firming expectations for rate cuts in 2026.
Exit markets gained traction in late 2025 as strategic and corporate buyers returned. Per Preqin, PE exit values rose 69% year over year in the first half of 2025, with exit counts up 18%. Mid-market transactions remained the core of activity, while large buyouts were less common. Continuation funds and secondary transactions grew in popularity as alternatives to traditional exits. According to Raymond James, roughly a fifth of 2025 PE sales involved continuation-style transactions, totalling about $105bn.
The outlook for 2026 is cautiously constructive. The firm expects deal activity to rebound if inflation moderates and rates stabilise, particularly in technology, healthcare and energy transition, though valuations may remain elevated. Fundraising is expected to recover as institutional investors seek returns above public markets, although median time to close a fund has lengthened to 22 months from roughly 16 months in 2020, and dry powder remains at record levels. Preqin projects private markets to grow from roughly $13tn to over $20tn by 2030.
The report flags significant challenges, including a sponsor-owned exit backlog that is the largest in two decades by value, count and share of portfolio companies, and the difficulty of refinancing in a higher-rate lending environment. It also notes conflicts of interest inherent in GP-led continuation funds, particularly around asset valuation, and the influence of geopolitical fragmentation, data localisation rules and tariffs on global trade.
Sector focus for 2026 centres on technology and cybersecurity, industrials and energy linked to AI infrastructure, and professional services. Valuation gaps remain a central obstacle, and buyers are increasingly using earnouts, which Dealsuite reports appear in 39% of small and mid-sized European M&A transactions. Private credit funds are gaining share as alternative lenders where banks have pulled back.
Exit markets gained traction in late 2025 as strategic and corporate buyers returned. Per Preqin, PE exit values rose 69% year over year in the first half of 2025, with exit counts up 18%. Mid-market transactions remained the core of activity, while large buyouts were less common. Continuation funds and secondary transactions grew in popularity as alternatives to traditional exits. According to Raymond James, roughly a fifth of 2025 PE sales involved continuation-style transactions, totalling about $105bn.
The outlook for 2026 is cautiously constructive. The firm expects deal activity to rebound if inflation moderates and rates stabilise, particularly in technology, healthcare and energy transition, though valuations may remain elevated. Fundraising is expected to recover as institutional investors seek returns above public markets, although median time to close a fund has lengthened to 22 months from roughly 16 months in 2020, and dry powder remains at record levels. Preqin projects private markets to grow from roughly $13tn to over $20tn by 2030.
The report flags significant challenges, including a sponsor-owned exit backlog that is the largest in two decades by value, count and share of portfolio companies, and the difficulty of refinancing in a higher-rate lending environment. It also notes conflicts of interest inherent in GP-led continuation funds, particularly around asset valuation, and the influence of geopolitical fragmentation, data localisation rules and tariffs on global trade.
Sector focus for 2026 centres on technology and cybersecurity, industrials and energy linked to AI infrastructure, and professional services. Valuation gaps remain a central obstacle, and buyers are increasingly using earnouts, which Dealsuite reports appear in 39% of small and mid-sized European M&A transactions. Private credit funds are gaining share as alternative lenders where banks have pulled back.
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