Acceleration of the PE Cycle will be key for growth, highlights Dechert report

Dechert LLP, in collaboration with Mergermarket, has released its 7th annual Global Private Equity Outlook report, offering crucial insights into the private equity (PE) market for 2025. 

Key findings from the report include:

• Co-investment Programs: 60% of global respondents now offer a co-investment program.
• Take-private Deals: 93% of respondents are somewhat likely to consider take-private deals in the next 12 months.
• Secondaries Activity: 82% of respondents expect secondaries activity to remain strong or increase in the next two years, following significant growth over the past five years.
• GP-Stake Divestitures: 34% of global respondents are exploring GP-stake divestitures in the next two years.

The report underscores the importance of an accelerated PE cycle to drive growth, with improving sentiment and reduced uncertainty helping to lay the foundation for a stronger 2025. Notably, in volume terms, 6,792 buyout transactions were recorded globally in the first three quarters of 2024, showing only a 1% decrease from the previous year. In terms of value, the total value of buyout deals in 2024 reached $703 billion, up 47% from 2023.

Chris Field, co-head of Dechert's private equity practice, stated, “While we have not yet returned to the high levels seen in 2021 and early 2022, dealmaking remains robust compared to pre-pandemic years.”

The report also highlights challenges for the industry, particularly around increasing regulatory scrutiny. 66% of PE firms expect heightened scrutiny from antitrust and other regulatory authorities to negatively impact their dealmaking in the coming year. Additionally, geopolitical conflict and weak economic growth are expected to significantly affect the market in the short term.

In the EMEA (Europe, Middle East, and Africa) region, dealmaking activity has been steady, with deal value rising significantly. Exit activity is also beginning to pick up, especially as interest rates fall and valuation models improve.

The outlook suggests that while challenges persist, the acceleration of the PE cycle and a recovering market could unlock new opportunities in 2025.