Global private equity (PE) activity strengthened significantly in 2025, making it one of the strongest years for the sector on record. Total PE investment value increased by 57% year-on-year to $905 billion, driven by a recovery in mega-deals, improved financing conditions and a narrowing gap between buyer and seller valuation expectations, according to EY Private Equity Pulse (Q4 2025).
Mega-deals return as investor confidence recovers
After two years of market recalibration, 2025 marked a turning point for the private equity industry. Stabilising interest rates, easing inflation and improved macroeconomic visibility allowed buyers and sellers to reconnect on pricing.
During the year, 13 mega-deals exceeding $10 billion were announced — the highest number on record. Overall deal volumes rose by 15%, signalling a broad-based re-engagement across the industry.
According to Ivan Lehon, EY Global Private Equity Leader, sponsors focused on fewer but larger and higher-quality transactions, creating positive momentum heading into 2026.
Narrowing valuation gaps and more flexible deal structures
The EY Pulse survey indicates that long-standing valuation gaps narrowed materially in 2025, becoming one of the key catalysts for renewed M&A activity.
To manage uncertainty, PE sponsors increasingly relied on:
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earn-out mechanisms,
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hybrid capital structures,
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other structured financing solutions.
Financing conditions improved as direct lending markets remained active, while syndicated loan issuance expanded, particularly for large buyout transactions.
Exit markets rebound as corporates return
Exit activity accelerated sharply in 2025, with total exit value rising by more than 50%, supported by renewed strategic demand and improving public market conditions.
Key exit metrics include:
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Trade sales: $481 billion (+75% YoY);
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Secondary transactions: $217 billion, backed by more than $1.6 trillion in dry powder;
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PE-backed IPOs: nearly tripled in the second half of 2025 to $28.1 billion.
Corporate acquirers were the primary drivers of the rebound, seeking scale, technology and operational capabilities.
According to Peter Witte, EY Global Private Equity Analyst Lead, the revival of exits — particularly sales to strategic buyers — has helped unlock delayed liquidity and restore confidence among general partners.
Outlook for 2026: optimism and focus on AI
Industry sentiment for 2026 is strongly positive:
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80% of general partners (GPs) expect acquisition activity to increase;
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72% anticipate higher exit activity, the highest level since tracking began;
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Nearly half of respondents believe that 2025 vintage deals will outperform those from 2023–2024.
The most attractive investment themes identified by PE firms include:
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AI-enabled business models,
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digital infrastructure,
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productivity- and scale-driven technologies.
Despite ongoing geopolitical risks, EY concludes that private equity is entering 2026 with stronger momentum, improved market alignment and heightened conviction in value creation.
