After three years of dampened dealmaking, we observed early in 2025 that the global  private equity (PE) industry was “emerging from the fog.” Now, the fog has finally burned off. Dealmaking returned in 2025 in force: Buyouts surged, exits rebounded, and initial public offerings (IPOs) reemerged. 

Indeed, buyout and growth deals larger than $500 million in deal size—a typical barometer for industry health—increased 44 percent to over $1 trillion in value, eclipsing 2021’s total to become the highest year on record for deals of this size. Deal value, when measured across all buyout and growth deal sizes, increased 17 percent. The value of PE-backed exits globally surged as well—up more than 40 percent—aided by a nearly 100 percent increase in PE exit deal volume via IPO. “Megadeals” (that is, transactions larger than $2.5 billion) also returned, reflecting the changed environment of 2025 compared with the recent past. Not only did 2025 see the largest PE deal in history (the announced $55 billion take-private of Electronic Arts by a syndicate of firms), but it also marked the third-highest year ever for take-private activity by either total deal count or value. 

Now, with improved visibility, we can more clearly observe how much the private equity terrain has changed. Shifts in deployment, returns, value creation, and traditional fundraising— previously considered to be episodic—are more likely structural features of a maturing industry. Moreover, the rapid innovation and implementation of AI is reshaping industry structures, introducing new competitors, and promising significant productivity increases. The technology offers both investment risks and opportunities (and could significantly change how PE firms themselves operate). The landscape is, therefore, now both more technical and more demanding, even for experienced drivers. Success on the road ahead will depend less on speed than on having the right vehicle—fit for the changed terrain, properly equipped, and driven with discipline.

Click to Download the Report

Private equity finally found some footing in 2025. Deal and exit values surged, a few megadeals stole the headlines, and the champagne almost popped. Almost. The rebound was narrow, and distributions stayed stubbornly low. Fund-raising? For many general partners, that process remained a grind.

What we’re experiencing, in other words, is a K‑shaped recovery in a world where low prices, cheap debt, and easy multiple expansion are gone for the foreseeable future.

This year’s report asserts that “12 is the new 5,” meaning today’s deals demand faster EBITDA growth. Actually achieving this growth requires sharper value creation and a clearer, data-backed edge. The winning firms will build systems, not slogans. They will invest in talent and AI, and move from full potential diligence to execution on Day 1.

Click to Download the Report

Through one lens, 2024 can be considered the year of the partial exhale. 

Interest rates and inflation finally came down. Economic growth in many markets remained stable. In response, deal investment value increased by 37% and exit value moved 34% higher. Alas, fund-raising struck a discordant note, falling 23%. As we’ve mentioned before, fund-raising is a lagging indicator for deal activity. 

The real culprit behind lackluster fund-raising is a persistent liquidity situation for global limited partners (LPs). While exit activity accelerated last year, distributions as a portion of net asset value sank to 11%, the lowest rate in over a decade. 

Positive signs? Rates and inflation appear poised to remain stable or decrease in many markets. Dry powder is still mountainous and aging. General partners are finding new and creative ways to boost LP liquidity. More dollars should flow into the industry from sovereign wealth funds and private wealth. And most important, returns remain strong. 

Click to Download the Report

To the casual observer, 2024 may have felt like yet another difficult year for private equity (PE) globally. Fundraising remained tough—down 24 percent year over year for traditional commingled vehicles, marking the third consecutive year of decline. Investment returns were muted, especially compared with buoyant public markets.

Our analysis reveals a more nuanced picture. After two years of murky conditions, private equity started to emerge from the fog in 2024.

For one, the long-awaited uptick in distributions finally arrived. For the first time since 2015, sponsors’ distributions to limited partners (LPs) exceeded capital contributions (and were the third highest on record).1 This increase in distributions arrived at an important time for LPs: In our 2025 proprietary survey of the world’s leading LPs, 2.5 times as many LPs ranked distributions to paid-in capital (DPI) as a “most critical” performance metric, compared with three years ago. There was also a rebound in dealmaking after two years of decline, with a notable increase in the value and number of large private equity deals (above $500 million in enterprise value). Exit activity, in terms of value, started to whir again as well, especially sponsor-to-sponsor exits.

Click to Download the Report

Our ongoing research on the industry’s dynamics and performance has revealed several insights, including the following trends:

Macroeconomic challenges continued. If 2022 was a tale of two halves, with robust fundraising and deal activity in the first six months followed by a slowdown in the second half, then 2023 might be considered a tale of one whole. Macroeconomic headwinds persisted throughout the year, with rising financing costs and an uncertain growth outlook taking a toll on private markets. Full-year fundraising continued to decline from 2021’s lofty peak, weighed down by the “denominator effect” that persisted

in part due to a less active deal market. Managers largely held onto assets to avoid selling in a lower-multiple environment, fueling an activity-dampening cycle in which distribution-starved limited partners (LPs) reined in new commitments.

Performance in most private asset classes remained below historical averages for a second consecutive year. Decade-long tailwinds from low and falling interest rates and consistently expanding multiples seem to be things of the past. As private market managers look to boost performance in this new era of investing, a deeper focus on revenue growth and margin expansion will be needed now more than ever.

Click to Download the Report

The year 2023 was one of portent. Deal value fell by 37%. Exit value slid even more, by 44%. Fund-raising dropped across private capital, as 38% fewer buyout funds closed. Interestingly, dollar commitments in buyouts surged as a number of high-performing funds came to market. But it was truly a year of haves and have-nots. Just 20 funds accounted for more than half of all buyout capital raised. Yet what’s driving these declines couldn’t be more dissimilar to what was happening in 2008–09, and making sense of it requires a different lens altogether. 

As difficult as it was, the aftermath of the GFC followed a predictable pattern: To cope with the crisis, central bankers slashed interest rates to spur activity, the economy slowly stabilized, and private equity was able to claw its way back from what many predicted would be its unraveling. The resulting period of growth in the years that followed created a private equity industry that is vastly larger and more complex than anyone in 2008 could have reasonably expected. 

Yet today that size and complexity magnify the challenges the industry faces. Business conditions are more perplexing than predictable. Interest rates have risen faster than at any time since the 1980s, and it remains unclear when the US Federal Reserve will reverse course or where rates will eventually settle. Concerns about what we dubbed last year “the most anticipated recession in history that hasn’t happened yet” continue to linger. Yet to the surprise of most analysts, the economy is chugging along nicely. Record-low unemployment, reasonable growth, and surging public markets in the US suggest the possibility that we might just escape these months of turmoil with nothing worse than a soft landing. 

These crossed signals have left private equity hamstrung. The sheer velocity of the interest rate shock was something few in the industry had ever experienced, and the impact on value has driven a wedge between buyers and sellers.

Click to Download the Report

Welcome to the 2023 edition of McKinsey’s annual review of private markets investing. Our ongoing research on the industry’s dynamics and performance has revealed several insights, including the following trends:

The music didn’t stop, but someone turned it way down. Private markets have enjoyed strong tailwinds since the depths of the Global Financial Crisis (GFC). Interest rates stayed low, credit availability was high, and valuations rose consistently. Each year since its inception, this annual publication has discussed new records in fundraising and deal flow while celebrating strong performance across asset classes. Even in 2020, when activity stalled briefly during the early months of the COVID-19 pandemic, private markets hummed again in the second half. In almost every regard, 2021 was an exceptional year, but it was not a trend breaker. Markets climbed higher still, awash with central-bank-induced liquidity. In the first half of 2022, central banks fought roaring inflation with sharply rising interest rates, and public market valuations cratered. In the private markets, first-half deal activity softened but subtly so, nearly matching the record-setting pace set in 2021. 

Click to Download the Report

It’s safe to say the private equity industry has never seen anything quite like what’s happened over the last 24 months. While the sharp drop-off in deal activity in late 2022 and into 2023 echoes the period following the 2008–09 global financial crisis (GFC), the situation the industry faces today is largely unprecedented. The numbers are all very GFC-like: Deal value and deal count have fallen 60% and 35%, respectively, from their peaks in 2021. Exit value is down 66%, and the number of funds closing is off by nearly 55%.

Click to Download the Report

Welcome to the 2022 edition of McKinsey’s annual review of private markets investing. Our ongoing research on the industry’s dynamics and performance has revealed several insights, including the following trends: 

Private markets bounced back in 2021. After a year of pandemic-driven turbulence that suppressed fundraising and deal activity, private markets rebounded across the board. Fundraising was up by nearly 20 percent year over year to reach a record of almost $1.2 trillion; deal makers were busier than ever, deploying more than $3.5 trillion across asset classes; and assets under management (AUM) grew to an all-time high of $9.8 trillion as of July, up from $7.4 trillion the year before. Dollars continued to fund higher risk-return strategies in private equity (PE) and infrastructure and rotated into riskier strategies in real estate.

Click to Download the Report

By just about any measure, private equity set a remarkable new standard for itself in 2021. Buyout deal value and exits shot to stunning new records. General partners (GPs) had the secondbest fund-raising year in the industry’s history, capping a five-year run that has netted $1.8 trillion in new buyout capital (see Figure 1). Funds boosted distributions to limited partners (LPs) and continued to deliver returns outpacing any other asset class. All in all—and despite the continued economic uncertainty brought on by the Covid-19 pandemic—private equity put a bold exclamation point on what has turned out to be a decade of outstanding performance.

Click to Download the Report