The private equity industry spent 2022, 2023, and much of 2024 in a state of suspended animation. Elevated interest rates made financing difficult, valuation gaps between buyers and sellers remained wide, and the exit market all but froze. Limited partners grew restless as distributions slowed to a trickle while capital calls continued.

Then came 2025—and everything changed.

Global private equity deal volume is expected to reach approximately $2 trillion by year's end, a level not seen since the banner COVID-era year of 2021. In the United States alone, M&A activity surged 49% to approximately $2.3 trillion, a stunning reversal from the doldrums of recent years.

The Return of the Megadeal

Perhaps nothing symbolizes the market's revival more than the return of megadeals—those $10 billion-plus transactions that defined the buyout industry's golden age. Through late November, 63 such deals had been announced globally, exceeding the prior annual high set a decade earlier.

The crown jewel? A consortium led by Silver Lake and Affinity Partners, joined by Saudi Arabia's Public Investment Fund, agreed to acquire Electronic Arts in an all-cash deal valued at $55 billion. If completed, it would represent the largest leveraged buyout in history—a symbolic passing of the torch from the KKR-led RJR Nabisco deal that captivated Wall Street in 1989.

"What we're seeing is a fundamental reset of the dealmaking environment. Financing costs have stabilized, valuations have normalized, and sponsors are finally putting their massive dry powder reserves to work."

— Robert Chen, Global Head of Private Equity, Goldman Sachs

Q3: A Record Quarter

The third quarter of 2025 marked a particular inflection point. Firms announced 156 deals during the period, and the total value of those transactions reached an all-time quarterly high of $310 billion. The frenzy touched every sector, from technology and healthcare to industrials and consumer goods.

Notable transactions included Thoma Bravo's $12.3 billion acquisition of Dayforce, the human capital management software provider, and an $18.3 billion leveraged buyout of medical device maker Hologic by Blackstone and TPG.

2025's Biggest Private Equity Deals

  • Electronic Arts: $55 billion (Silver Lake, Affinity Partners, PIF)
  • Hologic: $18.3 billion (Blackstone, TPG)
  • Dayforce: $12.3 billion (Thoma Bravo)
  • Multiple tech take-privates: Various deals ranging from $5-10 billion

The Exit Floodgates Open

For limited partners who had grown weary of illiquid holdings and missed distributions, 2025 brought welcome relief. Global exit value for the first nine months reached $468 billion—84% higher than the same period in 2024 and already exceeding the full-year exit totals for both 2023 and 2024.

IPOs returned as a viable exit path, with several sponsor-backed companies successfully listing. Strategic sales picked up as corporate acquirers, flush with cash and facing their own growth pressures, stepped up their M&A activity. Secondary transactions—where sponsors sell portfolio companies to other sponsors—remained active for companies where the timing wasn't right for IPOs or strategic sales.

Dry Powder Dynamics

The dealmaking surge has begun to dent the industry's massive capital reserves. Dry powder—committed but undeployed capital—held by U.S.-based private equity funds dropped to approximately $880 billion in September 2025, down from a record $1.3 trillion in December 2024.

That's still an enormous sum waiting to be invested, but the direction of travel is significant. After years of hoarding capital, sponsors are finally putting money to work, a development that bodes well for continued activity into 2026.

Challenges Remain

The revival hasn't been without turbulence. Tariff uncertainties put a chill on dealmaking at several points during the year, particularly for companies with significant international exposure. Antitrust scrutiny has intensified, with regulators taking a harder look at deals that might consolidate market power.

Portfolio company performance has also been uneven. While some sponsors have seen their investments thrive, others have struggled with the cumulative effects of years of elevated financing costs and slower growth. The divergence in outcomes has created winners and losers among the major firms.

2026 Outlook: More of the Same?

Industry observers are broadly optimistic about dealmaking prospects for 2026. Several factors support continued momentum:

  • Lower Interest Rates: Even with the Fed moving slowly, financing costs have declined from 2023-2024 peaks
  • Improved Liquidity: Banks are more willing to underwrite leveraged loans after working through past problems
  • Narrowing Valuation Gaps: Buyer and seller expectations have converged, facilitating deal completion
  • GP Pressure: Sponsors face pressure to return capital to LPs, driving exit activity
  • LP Appetite: Institutional investors remain committed to private equity allocations

The pressure on general partners to clear portfolio backlogs and make distributions remains intense. Many funds are approaching the end of their investment periods, adding urgency to both deployment and exit efforts.

What It Means for Investors

For individual investors, the private equity revival has indirect but meaningful implications. Publicly traded alternatives managers like Blackstone, KKR, Apollo, and Carlyle have seen their stocks benefit from improved sentiment. Companies that become takeover targets often see substantial stock price gains, creating opportunities for equity investors who identify likely candidates.

The broader takeaway is that the wheels of finance are turning again after years of friction. M&A activity is one of the great engines of corporate efficiency, capital allocation, and value creation. Its revival in 2025 suggests that, for all the challenges facing the economy, the fundamental machinery of capitalism remains in working order.