A global private equity (PE) revival is taking shape with a rebound in dealmaking gaining traction. But lingering headwinds from economic uncertainty, underscored by sluggish fund-raising, still cloud prospects for a full-blown PE recovery, a new report said on Monday.
According to Bain & Company’s 16th annual Global PE Report, private equity investments as well as exits both bounced back last year in clear signs of renewed vigor for PE, reversing sharp declines in the two previous years that marked one of the industry’s most challenging periods since the global financial crisis.
Read | M&A market set for a comeback in 2025 as headwinds ease, says Bain & Company
Improving environment
Pent-up appetite among general partners (GPs) to get deals done and put aging dry powder to work, coupled with an improving economic environment as central banks cut policy interest rates, fueled a 37 percent year-on-year rise in buyout investment value to $602 billion in 2024 (excluding add-on deals). Alongside, exits also rebounded last year. Global exit value jumped 34 percent year-on-year to $468 billion, while exit count climbed 22 percent to 1,470, marking signs of a tentative but welcome thaw in the exits deep freeze that has staunched returning distributions of capital to limited partners (LPs), as well as broader PE industry liquidity, while leaving GPs sitting on backlog of 29,000 unsold companies.
Despite a resurgence in investments and exits signaling a positive shift in dealmaking, Bain’s latest analysis highlights that private equity’s continued momentum in 2025 will depend on navigating a dynamic macroeconomic landscape. While challenges such as inflation trends, interest rates, trade policy, and geopolitical factors remain, the industry has demonstrated resilience and adaptability and is well-positioned to accelerate growth as conditions evolve.
“2024 can be considered the year of the partial exhale. Whether the renewed impetus in 2024 can build will depend on how policy unfolds,” Hugh MacArthur, chairman of the global private equity practice at Bain & Company, said.
“We think the headwinds that have held back activity since mid-2022 should continue to dissipate. The industry is anxious to make deals, GPs are finding creative ways to boost liquidity, more dollars should flow in from sovereign wealth funds and private wealth and, returns remain strong. But deal appetite is still tempered by the uncertainties keeping markets on edge. Investors are looking for clarity to break through the policy clouds on the economy, trade, regulation and geopolitics,” he said.
A new recovery
Bain’s report also highlights that a full-blown resurgence for PE globally should look very different from past recoveries as the industry grapples with structural disruptions which pose large-scale strategic questions. These far-reaching changes will significantly alter the basis of competition for investment opportunities and new capital in years ahead, it concludes.
Bain notes that the industry’s costs to generate market-beating returns are climbing steeply even as fees charged to investors are coming under heightened pressure. Average net management fees having fallen by as much as half since the global financial crisis, Bain analysis shows. Fierce competition for deals is ensuring valuation multiples stay high, elevated debt costs make it more difficult to generate value through leverage, and the expense of key requirements, from generating differentiated insights to delivering world-class investor relations, is rising.
Gregory Garnier, Middle East head of the private equity practice at Bain & Company, said: “The Middle East is entering a dynamic period of growth and transformation, creating unprecedented opportunities for investors. As economies diversify and sectors such as technology, renewable energy, and infrastructure gain momentum, private equity firms have a unique chance to drive meaningful value. The most successful funds will be those that take a forward-thinking approach, leveraging regional expertise, strategic partnerships, and innovative value-creation models. By setting a clear vision and building a sustainable, long-term growth strategy, investors can position themselves at the forefront of this exciting new era.”
Solid dealmaking growth
Bain’s report charts the details of the revival in the PE market seen last year as conditions for the industry improved substantially, despite ongoing cross-currents. Easing interest rates and an improving comfort factor on the macro outlook were the chief drivers for the dealmaking upturn seen across regions and for most transaction sizes, Bain finds. It notes that an 83 percent rise in issuance of syndicated loans and ongoing growth of private credit also greased the skids for GPs anxious to put to work some $282 billion of aging dry powder. But although the buyout industry’s dry powder stockpile fell slightly from $1.3 billion to $1.2 billion, the value of aging dry powder – unspent capital held for four years or longer – ticked up to 24 percent of the total, from 20 percent in 2002, keeping dealmakers under pressure and suggesting GPs are still struggling to find first-rate, affordable targets.
While globally buyout investment value was up 37 percent, the number of deals rose by a smaller 10 percent year-on-year, to around 3,000 as 2024’s average deal size jumped to $849 million, the second highest value historically. Deals worth $1 billion or more made up 77 percent of the total.
Europe leads in deal value
Solid growth in deal value across regions was led by Europe, with a 54 percent rise on a 9 percent uplift in deal numbers, while in North America deal value grew 34 percent on a matching 9 percent rise in deal count. Asia-Pacific deal value grew 11 percent on slightly fewer deals, with a number of countries in the region seeing double-digit growth – although this was overshadowed by weaker growth in China and a decline in Japan. China represented half of deal Asia-Pacific deal value as recently as 2020, but that fell to just over 25 percent last year.
Public to private deals continued to dominate the high-end of the PE market, increasing to $250 billion globally last year and representing almost half of deals over $5 billion in North America. Specialists taking advantage of mispriced assets is the US, even amid sharply higher public equity markets, amplified the take-private activity, Bain concludes. The technology sector meanwhile remained PE’s staple sector, representing 33 percent of buyout deals by value and 26 percent by volume, with activity also strong at the intersection of tech and healthcare. Financial services deal value also jumped 92 percent year-on-year, while deals in industrials rose 81 percent.
