USA – NEW YORK Trends and Developments Contributed by: Karessa Cain, Gregory Pessin, Mark Veblen, Victor Goldfeld, George Tepe and Courtney Hauck, Wachtell, Lipton, Rosen & Katz
Private equity dealmaking saw modest growth in the first half of 2025, even in the face of geopolitical uncertainty and market volatility. While the volume of private equity deals may not have met some commen - tators’ optimistic forecasts at the start of the year, the unrelenting pressure for liquidity events, high levels of dry powder and the normalisation of interest rates may lead to growing momentum heading into the sec - ond half of 2025 and a landscape in which creative dealmakers find compelling pockets of opportunity. Acquisitions and Exits Moderate but robust growth While private equity deal volume continues to remain below the peak in the pandemic, volume in 2025 is on track to surpass the levels seen in 2022, 2023 and 2024, with the first six months of 2025 reaching nearly USD1 trillion, according to Pitchbook data. Although the number of global deals in the first half of 2025 declined to approximately 7,850 as compared to 9,149 during the same period in 2024, “mega-deals” con - tinue to drive overall rising M&A deal value. Sponsors have been nimble and strategic in structuring larger transactions this year, driven by large deals primarily in the technology, banking and capital markets, and power and utilities industries – such as Thoma Bravo’s USD10.6 billion acquisition of portions of Boeing’s High levels of dry powder continue to make 2025 ripe for private equity M&A – particularly as more and larger funds approach the end of their life, and financial sponsors face increasing pressure to return money to their limited partners. Globally, private equi - ty exits through June 2025 reached nearly USD550 billion. Despite an increase in exits, the number of private equity funds that are six to nine years old have increased from 3,369 at the end of 2024 to 3,458 as of May 2025. As of June 2025, approximately 54.7% of all active private equity funds globally are six years or older and 25.9% are ten years or older, according to Pitchbook. Digital Aviation Solutions business. Growing pressure for exit options Traditional M&A involving strategic acquirers remains a key path to liquidity for sponsors, even though greater creativity and complexity may be needed to get the deal done. For example, in April 2025, GTCR, Global
Payments and FIS announced a three-way transaction in which Global Payments will acquire GTCR’s 55% stake and FIS’s 45% stake in Worldpay for USD24.25 billion in cash and stock, and FIS will acquire Global Payments’ Issuer Solutions business. At the same time, other traditional exit paths, such as IPOs on the New York Stock Exchange or Nasdaq, have slowed over the past few years, with sponsors increasingly looking to alternatives such as sponsor- to-sponsor sales, minority investments and con - tinuation funds, as well as other liquidity events like leveraged dividends and NAV financings. As private equity funds look to optimise the liquidity playbook for investors (as explained further below), one recent survey indicated that more than 60% of limited part - ners surveyed preferred conventional exits over alter - natives such as dividend recapitalisations, even at the expense of lower valuations. One particularly well-trodden exit strategy is the use of continuation funds, which reached new heights in 2024 when 85 continuation funds raised approximate - ly USD31.1 billion. Continuation funds provide end- of-life funds an avenue for liquidity by giving existing limited partners the choice to either cash out or retain exposure by reinvesting. In 2024, continuation fund exits reportedly accounted for approximately 13% of all sponsor-supported exit volume in 2024, and in the first six months of 2025, sponsors used continuation funds to exit investments worth approximately USD41 billion. Data suggests that in the first quarter of 2025, continuation funds returned a median of 1.4 times the initial investment (net of fees), which is slightly higher than returns for buyout funds. Despite continu - ing growth in the continuation fund space, Houlihan Lokey data indicates that between 85% and 92% of investors chose to sell rather than remain invested when a portfolio company was sold to a continuation vehicle in 2025, up from 75% to 80% in 2024. This year in particular has seen an emergence of new, multiple continuation vehicles, otherwise known as “CV-squared” vehicles – compounding concerns of limited partners and others in the industry. While not all assets will warrant a second rollover, a disciplined approach may focus on assets in high-growth areas
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