Deal Environment: Recovery in Deal Making

Private equity concluded 2025 with a decisive rebound after three years of subdued activity, posting its second-strongest year on record for both deal value and exits. Global buyout deal value reached $904 billion, up 44% year-over-year, while exit value climbed to $717 billion, up 47% year-over-year.

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We believe the recovery was powered by interest-rate easing, with Fed funds cuts lowering middle-market term loan costs by approximately three percentage points from peak levels, a corporate M&A boom, and a narrow wave of megadeals. Notably, 13 large transactions (each $10 billion or more) accounted for a significant portion of total deal value growth.

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This momentum was distinctly K-shaped and regionally concentrated. North America drove 80% of global deal value growth, with the U.S. alone seeing PE-related activity totaling $536 billion, up 54%, across 1,484 transactions. Within that, medtech reached a decade-high of $92.8 billion in deal value, while AI-linked transactions represented over 20% of U.S. megadeals and nearly one in three software deals, at 29%.

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From a sector perspective, strong deal volumes were seen in both technology and consumer, supported by asset-light business models, recurring revenues, and relative resilience to macro pressures. We also saw a notable trend within private equity: sports emerged as a new segment, with transaction value reaching an eight-year high.

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Public-to-private activity surged 43% globally and 72% in North America, reflecting discounted public-market valuations, with large take-privates such as Electronic Arts and Walgreens Boots Alliance exemplifying the trend. More broadly, we believe private equity may play a larger role in take-private activity, with companies remaining private for longer.