The private equity (PE) landscape in 2025 is marked by cautious optimism, creative liquidity solutions, and intensified competition. Bain & Company’s Global Private Equity Report 2025 highlights key trends shaping the industry, from rebounding dealmaking to the growing influence of generative AI.

Here’s what you need to know.

1. A Partial Recovery Takes Shape

After two years of decline, PE dealmaking rebounded in 2024, with global buyout deal value rising 37% and exit value increasing 34%. However, fund-raising lagged, dropping 23%, as limited partners (LPs) grappled with prolonged asset holding periods and sluggish distributions.

Key Drivers:

• Macro Stability: Lower inflation and interest rates revived investor confidence.
• Dry Powder Pressure: With $1.2 trillion in unspent capital, GPs are under pressure to deploy aging funds.
• Public-to-Private Surge: Large take-private deals, like Vista Equity Partners’ $8.4 billion acquisition of Smartsheet, dominated the high end of the market.

Yet, challenges persist. Fund-raising remains a “haves vs. have-nots” game, with top-quartile funds growing 53% larger in successor funds, while others struggle to meet targets.

2. The Liquidity Crunch and Creative Solutions

Exits rebounded but failed to keep pace with the industry’s growth. Distributions as a percentage of net asset value (NAV) hit a decade-low of 11%, forcing GPs to explore alternative liquidity mechanisms:

• Minority Stakes: $71 billion in partial monetizations in 2024.
• Continuation Funds: Secondary funds raised $102 billion, enabling GPs to extend hold periods.
• NAV Loans: Expected to double to $300 billion by 2026.

The message is clear: Traditional exit channels are insufficient, and innovation is critical to returning capital to LPs.

3. Generative AI: The New Value-Creation Frontier

PE firms are racing to harness generative AI, with 20% of portfolio companies already operationalizing use cases. Leaders like Vista Equity Partners and Apollo Global Management are setting the pace:

• Vista mandates AI goals for all portfolio companies, driving productivity (e.g., 30% faster coding).
• Apollo’s Center of Excellence advises portfolio firms on AI adoption, yielding 40% cost reductions in content production.

Key Takeaway: AI is no longer optional—it’s a strategic imperative for operational efficiency and competitive edge.

4. Software Investing: The Margin Growth Challenge

Software deals have long relied on revenue growth and multiple expansion, but margin improvement has lagged. Bain’s analysis of 33 buyouts revealed:

• 94% projected margin growth, but actual delivery fell short.
• Top-quartile deals drove virtually all margin gains.

Solution: Integrated due diligence combining commercial, technical, and operational insights to underwrite profitable growth.

5. Carve-Outs: From Reliable Winners to High-Stakes Bets

Once a PE darling, carve-outs now deliver mixed results:

• Pre-2012: 3.0x MOIC (vs. 1.8x for other buyouts).
• Post-2012: 1.5x MOIC, barely matching broader market returns.

Winning Formula:

• Link separation plans to value-creation theses.
• Make tough decisions early (e.g., cost cuts, geographic rationalization).
• Install transformational leadership to drive change.

6. The Strategic Imperative: Scale, Fees, and Competition

Structural shifts are reshaping PE’s future:

• Fee Pressure: The “2 and 20” model is eroding, with net fees down ~50% since the global financial crisis.
• Retail and SWF Capital: Private wealth and sovereign wealth funds will drive 60% of AUM growth by 2033.
• Scale Matters: Larger firms dominate fund-raising and leverage capabilities (e.g., AI, data analytics).
• Strategic M&A: Deals like BlackRock’s $12.5 billion acquisition of Global Infrastructure Partners signal industry consolidation.

The Bottom Line: Differentiation is nonnegotiable. Firms must articulate a clear ambition—whether through scale, specialization, or innovation—to thrive.

Conclusion: Navigating the New PE Landscape

2025 is a year of measured recovery, but the rules of the game are changing. Success hinges on:

1. Liquidity Creativity: Embrace secondaries, NAV loans, and minority stakes.
2. AI Adoption: Embed generative AI into value-creation plans.
3. Margin Focus: Prioritize profitability, not just growth, in software deals.
4. Strategic Clarity: Define a differentiated path amid fee compression and competition.

For PE firms and investors alike, the message is clear: Adapt or risk falling behind.

NeoForm Business Partners helps private equity firms and portfolio companies navigate these shifts with tailored strategy and operational expertise. Contact us to learn more.

Source: Bain & Company, Global Private Equity Report 2025.

Download full report here or from NeoForm LinkedIn page.