Global Private Equity Factbook – Q4 2025

Global private equity deal activity showed renewed resilience in the fourth quarter of 2025, signaling a gradual normalization of market conditions after a prolonged period of caution across global capital markets. As concerns around aggressive interest rate hikes, inflation pressures, and tightening monetary policy began to ease, investor confidence strengthened and sponsors resumed deploying capital with greater conviction. The improvement in private equity investment activity, combined with stabilizing macroeconomic fundamentals, suggests that the asset class may be entering a more constructive phase heading into 2026.

During Q4 2025, global PE deal volume increased by approximately 19% quarter-over-quarter, reflecting a meaningful rebound in global dealmaking and renewed momentum across the private markets landscape. The increase was primarily supported by higher buyout transactions and a notable rise in private investment in public equity (PIPE) deals. Buyouts accelerated as financing conditions improved and valuation expectations between buyers and sellers gradually converged, enabling sponsors to unlock transactions that had been stalled during earlier quarters. PIPE investments also gained traction as volatility in the public markets created opportunities for private capital to provide strategic funding to listed companies.

Despite the increase in transaction volume, total capital deployed by private equity firms remained broadly consistent with the previous quarter. This suggests that the current phase of recovery is being driven largely by mid-market private equity deals rather than large-cap leveraged buyouts. Average deal sizes declined by roughly 16% during the quarter, reflecting a slowdown in mega buyouts and multi-billion-dollar acquisitions that had previously dominated the investment cycle. In the current environment, investors are demonstrating greater discipline around entry valuations and focusing on assets where operational value creation, digital transformation, and margin expansion can drive returns rather than relying solely on financial leverage.

From a geographic standpoint, the rebound in global PE investment was uneven but encouraging. Europe, Latin America, and the Middle East and North Africa (MENA) region recorded stronger transaction momentum during the quarter, supported by improving financing conditions and increasing investor appetite for diversified growth markets. By contrast, deal activity moderated in North America and Asia-Pacific, where valuation resets, regulatory dynamics, and cautious investor sentiment temporarily slowed transaction pipelines. Nevertheless, both regions remain central to the global private equity investment thesis, and deal activity is expected to strengthen as credit markets stabilize and corporate earnings visibility improves.

Sector allocation trends also highlight where sponsors are concentrating capital in the current cycle. Information technology, financial services, and healthcare collectively accounted for nearly half of total capital deployed during the quarter, reinforcing the continued focus on industries with strong structural growth drivers. Within the technology sector, deal activity was driven largely by investments in enterprise software, cloud platforms, cybersecurity, and data infrastructure businesses that offer recurring revenue and scalable operating models. In financial services, investors targeted specialized financial platforms, fintech infrastructure, payments ecosystems, and capital markets service providers. Meanwhile, healthcare private equity investments remained strong, supported by activity in medical devices, healthcare services, and healthcare IT.

While investment activity strengthened, the private equity exit environment presented a more nuanced picture. Exit volumes moderated during Q4 2025 as buyer selectivity increased and the broader market recovery remained uneven. Transactions became increasingly concentrated in high-quality portfolio companies with strong fundamentals and clear growth trajectories. Trade sales continued to dominate as the primary exit route, reflecting strategic buyers’ appetite for acquisitions that support consolidation and capability expansion. At the same time, IPO markets remained somewhat volatile, limiting the pace of sponsor-backed listings and delaying broader exit momentum.

Fundraising trends during the quarter offered a more positive signal for the private equity fundraising environment. Capital raised by private equity firms increased in Q4, reversing the softer fundraising trends observed earlier in the year. Several large flagship buyout funds, sector-focused strategies, and continuation vehicles successfully closed during the quarter. The improvement reflects strengthening limited partner (LP) confidence, as institutional investors continue to view private equity as a core allocation within diversified portfolios. However, LPs are becoming increasingly selective, prioritizing managers with differentiated strategies, strong historical performance, and clear deployment discipline.

Another defining feature of the current market environment is the industry’s significant dry powder levels. Although global dry powder declined during the quarter as general partners accelerated capital deployment, the overall stock of uninvested capital remains near historic highs. This creates mounting pressure for sponsors to deploy funds effectively, particularly as fundraising cycles lengthen and LPs become more cautious in committing new capital. As a result, many firms are sharpening their focus on proprietary deal sourcing, sector specialization, operational value creation, and platform acquisitions to generate differentiated returns.

Looking ahead, the outlook for global private equity in 2026 appears cautiously optimistic. Stabilizing interest rates, improving credit availability, and narrowing valuation gaps are expected to support a gradual acceleration in dealmaking. In addition, an anticipated increase in strategic acquisitions, secondary buyouts, and sponsor-to-sponsor transactions could further unlock liquidity across the market. As the private equity industry adapts to the evolving macroeconomic environment, capital deployment is likely to remain concentrated in sectors such as technology, healthcare, financial services, and AI-enabled businesses that demonstrate resilience, scalability, and long-term growth potential.

This edition of the Global Private Equity Factbook provides a comprehensive overview of these trends, highlighting key developments in private equity investments, exits, fundraising, sector activity, and regional dynamics. Together, these insights offer institutional investors, fund managers, and market participants a deeper understanding of how the global private equity market is positioning itself for the next phase of the investment cycle.