As we look back on 2025, we highlight several key themes that shaped private equity activity during the year:
- Macroeconomics and heightened uncertainty influenced PE investment behavior.
- Deal activity reflected a more cautious approach to capital deployment, with firms prioritizing add-on acquisitions over new platform investments.
- PE portfolio holding periods continued to lengthen.
- PE-to-PE transactions represented a meaningful share of overall PE deal activity.
Key Themes
PE Platform Acquisitions Influenced by Macroeconomic Factors
Across multiple market cycles, PEI’s 25 years of data shows a clear relationship between macroeconomic conditions, particularly the cost-of-debt, and private equity investment behavior. Periods of higher interest rates on debt have historically coincided with slower platform investment activity and fewer exits.
Platform Investments Decline in Favor of Add-ons
In 2025, PE platform acquisitions and exits declined materially. By contrast, add-on acquisitions proved more resilient, as firms focused on scaling existing portfolio companies. This reflects a more cautious approach to capital deployment, investing in smaller transactions with lower execution risk.
Holding Periods Extended
The median portfolio company holding period lengthened to nearly 6 years in 2025, the longest observed in 25 years of tracking this metric. This trend reflects more cautious exit timing and persistent valuation gaps between buyers and sellers.
Longer holding periods slow the private equity capital cycle by delaying distributions to limited partners, which in turn reduces the pace of capital redeployment into new funds.
PE-to-PE Transactions Represent a Higher Percentage of PE Deals
Although slightly lower in quantity compared 2024, PE-to-PE deal activity averaged approximately 30 deals per month in 2025. With the broader decline in platform acquisitions, PE-to-PE transactions accounted for more than 15% of all PE platform deals during the year.
Certain sectors (including technology, software, healthcare, and industrial services), consistently support repeat PE ownership. These sectors benefit from established exit pathways and sustained secondary market demand, making PE-to-PE transactions a dependable and recurring source of deal flow.
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