Amassing Agreement: 2025 Forecast for Thriving Private Equity Transaction Activity
In a recent Private Equity Guest Article published by The Sortino Group, Tom Whelan, a partner at Reed Smith in London, outlines several key catalysts expected to drive an increase in private equity dealmaking in 2025.
Whelan identifies renewed investor confidence following recent economic uncertainties as a significant factor encouraging more capital deployment. The improvement in fundraising conditions, with capital continuing to flow into private equity funds, also provides a substantial amount of dry powder for deals.
Opportunities arising from market dislocations and distress, particularly in undervalued assets, are another key driver for increased private equity dealmaking. The growth of technology and innovation sectors, which continue to attract significant investments, also plays a crucial role.
Favourable regulatory and economic developments in the UK and Europe enhance deal feasibility, while the US capital markets benefit from higher pricing and deeper liquidity compared to other markets. This combination creates an environment that is conducive to private equity dealmaking.
With Donald Trump as President, there is an expectation of a boost to the American economy and investment. The hope for increased certainty comes from a record number of parliamentary elections worldwide, which may lead to more predictable political landscapes and policies.
The trend of continuation funds, where assets are sold onto new continuation funds managed by the same manager, is becoming more mainstream. This trend is expected to continue into 2025.
Despite the optimism, fundraising remains challenging for many mid-market players and new funds being raised by new fund managers. The fund finance market, however, is anticipated to remain busy in 2025, expecting a potentially busy and successful year.
There is optimism about the potential for rebuilding infrastructure and industry in conflict zones, which could present further opportunities for private equity players. It's important to note that the views expressed in this article are those of the author and not necessarily those of AlphaWeek or The Sortino Group.
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Investors may find renewed confidence in finance and investing, particularly in the private-equity sector, due to the resolution of recent economic uncertainties. This confidence, combined with improved fundraising conditions and the availability of substantial dry powder, could spur increased private-equity dealmaking in 2025.
