2025 Private Equity & M&A Trends: Record Deal Values, Regional Winners & Exit Risks

The latest investment banking and private equity/venture capital (PE/VC) environment in 2025 is characterized by a divergence between deal value and deal volume. While firms are executing fewer transactions overall, the average size has increased—particularly in mega-deals, public-to-private transactions, and industry‐leading carve-outs. For example, U.S. PE deal value was up 38–50% YoY in H1, even as deal counts dropped. This suggests capital concentration toward large, high‐quality assets, where pricing discipline, financing availability, and strategic rationale align.

On the exit side, LPs and fund managers continue to feel constrained. IPO markets are weak, and despite rising exit values, exit volume—particularly via IPOs—is substantially lower. Trade sales (corporate acquirers buying PE portfolio companies) are gaining ground as a more feasible route, though often at pricing discount risks amidst tariff and valuation uncertainty. The buildup of dry powder (committed but undeployed capital) and allocation mismatches—especially for pension funds—create both pressure and opportunity for dealmakers, especially in the secondary market.

Regionally, M&A is especially strong in the MENA region, which saw a 149% YoY increase in H1 2025 deal value, and strength is also evident in APAC where mega-funds dominate value creation. Sectors like energy transition, infrastructure (especially digital/AI infrastructure), healthcare, and technology are drawing capital. On the flip side, real estate—especially office markets—is under pressure, highlighted in India where PE investment in realty fell 41% in H1 2025.

Strategically, banks and investment firms need to navigate a complex landscape: valuations remain sensitive; cost of capital is elevated; regulatory changes (especially in trade and taxation) are a material risk. Success will likely favor those who can manage valuation risk, source large deals, partner with corporates (for trade sales), or innovate in exit solutions (continuation funds, secondaries). Meanwhile, regions that are reducing administrative friction and pushing infrastructure and AI themes appear relatively better positioned.

Open questions include: To what extent will interest rate cuts (if any) reinvigorate smaller deal activity and IPO exits? How will trade policy evolve, especially U.S. tariffs, and how will that impact cross-border flows? What strategies will LPs and GPs adopt to address over-allocation and illiquidity? And which sectors or geographies will see the next wave of breakout M&A? Addressing these will be critical for investment banks and their clients as 2026 approaches.