Private Equity Edition
Volume 5
PRIVATE EQUITY EDITION
November 7, 2025
KKR DEFIES FUNDRAISING HEADWINDS WITH RECORD $43B QUARTER; SIGNALS MEGA-FUND DOMINANCE
KKR & Co. reported record-breaking Q3 2025 results on November 7, raising $43 billion in capital, the firm’s second-highest fundraising quarter in history and a defiant counterpoint to the industry-wide fundraising malaise. Fee-related earnings reached a record $1.15 per share, while total operating earnings hit $1.55 per share (up 17% quarter-over-quarter) and adjusted net income came in at $1.41 per share, beating analyst expectations by 10.16%.
The fundraising haul was driven overwhelmingly by KKR’s credit platform, which accounted for approximately 60% of the $43 billion, with Global Atlantic insurance inflows alone contributing $15 billion in credit and KKR’s private wealth K-Series suite attracting $4.1 billion, marking a 20% increase from Q2 and an 80% rise year-over-year. Management fees grew 19% year-over-year to $1.1 billion (16% excluding catch-up fees), reflecting both successful fundraising and aggressive capital deployment.
Despite these strong results, KKR’s stock declined 3.32% in pre-market trading following the earnings announcement, closing November 7 down, reflecting broader investor concerns about private markets valuations and the sustainability of mega-fund performance amid industry consolidation pressures. The stock has declined approximately 19% in 2025, underperforming the broader market despite operational outperformance.
Deployment Momentum Continues
KKR deployed $26 billion during Q3, bringing twelve-month deployment to $85 billionwith $126 billion in remaining dry powder. The firm’s assets under management expanded to $723 billion, positioning KKR well toward its ambitious goal of reaching $1 trillion in AUM by 2030. Co-CEOs Scott Nuttall and Joe Bae emphasized that nearly half of Q3 realized carried interest came from the firm’s private equity business in Asia, highlighting geographic diversification as a key performance driver.
Transaction and monitoring fees totaled $328 million while capital markets fees reached $276 million, though the latter declined 35% year-over-year, reflecting reduced sponsor-backed financing activity in a challenging IPO environment. Looking forward, KKR’s management emphasized that “the demand for capital of all forms for the next 5, 10, 15 years in the business that we’re in is only growing,” citing global economic expansion and technology-driven investment opportunities.
SCHWAB’S $660M FORGE GLOBAL ACQUISITION ACCELERATES RETAIL PRIVATE MARKETS RACE
Charles Schwab Corporation announced November 6 a definitive agreement to acquire Forge Global Holdings [NYSE: FRGE] for approximately $660 million ($45 per share in cash), representing a 72% premium to Forge’s November 5 closing price and valuing the private markets platform at a significant premium to reflect strategic positioning in the rapidly growing retail alternative investments segment.
Forge operates the premier private market platform and trading marketplace through which investors have bought and sold more than $17 billion in private company shares. The platform offers qualified investors direct and indirect opportunities to participate in private markets, combining a direct marketplace, private company solutions, and proprietary data to enhance access and transparency. Forge also has forthcoming interval funds designed to broaden private market exposure with lower costs and reduced minimums.
“Our acquisition of Forge builds on more than half a century of Schwab innovating on behalf of individual investors, advisors and employers,” stated Rick Wurster, President and CEO of Charles Schwab. “Through Forge’s leading marketplace, we’re uniquely positioned to deepen liquidity, improve transparency, and further democratize access to this increasingly important source of wealth creation for investors”.
Strategic Rationale: $13 Trillion Addressable Market
The acquisition accelerates Schwab’s strategy to deliver private markets capabilities to retail and advisor clients, capitalizing on secular trends driving sustained momentum in private markets. According to Bain & Company projections cited by Schwab, private wealth capital allocated to alternative asset classes is expected to grow from $4 trillion today to $13 trillion by 2032, representing a 225% increase over seven years driven by multi-decade trends and rising investor demand for portfolio diversification beyond traditional stocks and bonds.
The combination unites Schwab’s 46 million client accounts and $11.6 trillion in client assets with Forge’s decade-plus experience in private market infrastructure. Kelly Rodriques, CEO of Forge, emphasized that “this combination will transform how the private market works. With Schwab’s reach and Forge’s solutions, private companies will gain access to liquidity and new growth options from an expanded market of qualified retail investors, while investors will gain new ways to invest in the innovation economy”.
The acquisition builds on Schwab’s recent launch of Schwab Alternative Investments Select (available to retail clients with $5+ million in household assets) and Schwab Private Issuer Equity Services, creating an integrated ecosystem connecting private stock plan administration with liquidity access. The transaction is expected to close in H1 2026 pending shareholder and regulatory approvals, with Forge’s two largest stockholders (Motive Capital and Deutsche Börse) committing to support the transaction.
ARSENAL CAPITAL CLOSES $725M THERMOSAFE ACQUISITION; HEALTHCARE COLD CHAIN CONSOLIDATION ACCELERATES
Arsenal Capital Partners completed November 3 its acquisition of ThermoSafe from Sonoco Products Company [NYSE: SON] for a total purchase price of up to $725 million, consisting of $650 million cash at close plus up to $75 million in additional consideration contingent on 2025 performance targets. The transaction, originally announced September 7, represents one of the largest middle-market healthcare services platform acquisitions in Q4 2025 and positions Arsenal to capitalize on the rapidly growing pharmaceutical cold chain logistics market.
ThermoSafe, headquartered near Chicago in Arlington Heights, Illinois, provides temperature-controlled packaging systems for the transportation of pharmaceuticals, biologics, vaccines, and clinical supplies. The company’s product portfolio includes Parcel Shippers (single-dose or multi-dose medications), Reusable Shippers (repeated cold chain logistics), and Bulk Transport Systems (pallet-sized temperature assurance shipping), along with lab services through its ISC Labs business providing design, testing, prototyping, and regulatory compliance services.
In 2024, ThermoSafe generated more than $240 million in sales and approximately $50 million in pro forma adjusted EBITDA. Based on the $650 million cash payment at close, this equates to an enterprise value of approximately 13x EBITDA, a premium multiple reflecting the strategic value of temperature assurance assets amid growing biologics, personalized medicine, and vaccine demand.
Strategic Growth Platform
“ThermoSafe’s leadership in cold chain solutions aligns with Arsenal’s focus on partnering with and helping to build businesses that deliver innovation and lasting value,” stated George Abd, an Operating Partner at Arsenal. “With decades of domain and technical expertise in the technology-rich industrial growth sectors, Arsenal is looking forward to partnering with Jim Lassiter and his team to further strengthen ThermoSafe’s position as a value-added partner providing innovative solutions to its markets and customers”.
ThermoSafe CEO Jim Lassiter will continue to lead the company following the acquisition, with more than 900 employees operating across facilities in the United States, France, India, and Brazil. The transaction underscores continued private equity interest in healthcare infrastructure and supply chain assets, particularly those with high barriers to entry, regulatory moats, and exposure to secular growth trends in pharmaceutical logistics.
For Sonoco, the divestiture “substantially concludes Sonoco’s portfolio transformation, which simplified our operations from a large portfolio of businesses into two core global business segments focused on metal and paper consumer and industrial packaging,” according to President and CEO Howard Coker. Net proceeds will reduce Sonoco’s net leverage ratio to approximately 3.4x, strengthening the balance sheet and focusing capital on core packaging operations.
Q3 2025 DEAL ACTIVITY: MEGA-DEALS MASK UNDERLYING VOLUME WEAKNESS
Global private equity investment reached $537.1 billion across 4,062 deals in Q3 2025, slightly higher than Q3 2024’s $512 billion but achieved with 20% fewer transactions (5,070 in Q3 2024), underscoring the market’s sharp bifurcation toward large, high-quality assets and away from broad-based deal activity. Year-to-date through Q3, global PE investment totaled $1.5 trillion, positioning 2025 to exceed investment levels seen over the past three years if Q4 momentum continues.
The United States dominated capital deployment, accounting for $300.2 billion across 1,791 deals in Q3, more than half of global PE investment. Critically, the three largest U.S. deals, all public-to-private buyouts, contributed $95.3 billion to this total: Electronic Arts ($56.4 billion), Air Lease Corporation ($28.2 billion), and Dayforce ($12.4 billion). This concentration highlights the disproportionate impact of mega-deals on regional and global investment flows, with just three transactions representing nearly one-third of total U.S. PE investment for the quarter.
Median Deal Sizes Surge Amid Selectivity
U.S. median deal sizes surged dramatically: $350 million for buyouts (up significantly from historical $200-250 million medians), $201 million for M&A, and $21 million for PE growth deals. This escalation reflects sponsors’ focus on top-end deals, increased prevalence of $1 billion-plus buyouts, and more frequent private-to-public transactions. Abundant dry powder and strategic investments in AI infrastructure, energy transition, and healthcare tech further boosted transaction sizes.
PitchBook’s Q3 2025 US PE Breakdown confirms the optimism entering the final quarter of 2025, with analysts noting that 2,347 announced and closed deals generating aggregate deal value of $331.1 billion represented a 28% quarter-over-quarter increase and 38% year-over-year growth. Technology transactions year-to-date already surpassed 2024’s full-year total deal value, while B2B deals remained robust.
Add-On Acquisitions Drive Value Creation
Add-on deals remained a strategic priority for U.S. PE investors, reaching $267.6 billionthrough Q3 2025 and tracking to surpass both 2023 and 2024 full-year levels. This sustained focus reflects an efficient strategy to scale platform businesses and create value amid persistent financing constraints and macroeconomic uncertainty. The add-on playbook allows sponsors to acquire bolt-ons at lower multiples than platform companies (typically 5-6x EBITDA for add-ons versus 8-10x for platforms), generating immediate multiple arbitrage while expanding geographic footprints and service capabilities.
SECONDARIES MARKET ON TRACK FOR RECORD $210B YEAR; RETAIL CAPITAL RESHAPES DYNAMICS
The private equity secondaries market sustained record-breaking momentum through Q3 2025, reaching $165 billion in transaction value and positioning full-year 2025 to exceed $210 billion, far surpassing the previous record of $160 billion set in 2024. Q3 alone generated $60 billion in secondaries volume, reflecting accelerating liquidity needs amid a challenging exit environment and unprecedented institutional demand for secondary exposure.
According to Jefferies’ H1 2025 Global Secondary Market Review, the market exceeded expectations across every metric: H1 volume hit $103 billion (51% increase from $68 billion in H1 2024), LP pricing reached 90% of NAV (up from 89% in 2024), and available capital surpassed $300 billion for the first time, providing substantial dry powder to support continued market expansion. LP-led secondaries totaled $56 billion while GP-led volume climbed to $47 billion, with single-asset continuation vehicles accounting for a substantial portion of GP-led activity.
Continuation Vehicles Reach Structural Importance
GP-led secondaries now represent 16% of total sponsor exit volume in 2025, reflecting the growing structural importance of continuation vehicles in extending ownership of high-performing assets and supporting more consistent return profiles. Schroders Capital believes secondaries could “transform the industry’s buyout model, with continuation vehicles functioning as a cost-effective method to continue transformational growth without the disruption of a change of control”. Verdun Perry of Blackstone predicts annual secondaries deal value could reach $220 billion by end of 2025 and $400 billion by 2030.
Multi-asset GP-led deals surged to 47% of GP-led issuance in H1 2025 versus 32% in H1 2024, driven substantially by retail capital inflows requiring quick deployment. Private wealth fundraising now represents 18% of overall near-term fundraising in the secondaries market as of Q3 2025, with growth in retail channels (primarily through ‘40 Act evergreen funds and target-date retirement vehicles) supplying GPs with steady capital that necessitates rapid deployment, fueling higher continuation vehicle pricing and increased activity in multi-asset deals.
EXIT MOMENTUM BUILDS: U.S. EXITS REACH FOUR-YEAR HIGH DESPITE Q3 SLOWDOWN
U.S. private equity exit value reached $485.5 billion across 846 exits through Q3 2025, already surpassing full-year totals for 2022 ($348B), 2023 ($404B), and 2024 ($478B). However, exit volumes declined significantly, 846 exits through Q3 2025 compared to 1,362 during all of 2024, indicating that while aggregate value increased, exit activity remains concentrated among large, high-quality portfolio companies capable of achieving premium valuations.
Public listings contributed materially to exit value acceleration, with IPO-driven exits more than doubling to $111.7 billion through Q3 2025 from $44.1 billion during all of 2024. This surge reflects the gradual reopening of IPO markets following the Federal Reserve’s September interest rate cuts and improving investor appetite for new issuance, particularly in healthcare, financial services, and technology infrastructure sectors.
Despite strong year-to-date exit values, Q3 2025 marked the third consecutive quarterly decline in exit values, with exits down 40% from Q1 2025 levels. PitchBook analysts noted, however, that exit counts increased 22.4% quarter-over-quarter, the first such spike since 2021, indicating “more assets are beginning to move through the system” and suggesting improving liquidity conditions could support stronger Q4 exit activity.
FUNDRAISING CRISIS DEEPENS: Q3 MARKS LOWEST QUARTERLY CLOSE COUNT IN FIVE YEARS
Global private equity fundraising increased marginally to $177.1 billion in Q3 2025 from $174.8 billion in Q2, but the number of funds reaching final close plummeted to 205 globally, down 30.27% from 294 in Q2 and marking the lowest quarterly fund close count in the past five years. This dramatic decline in fund closes, even as aggregate capital raised remained relatively stable, underscores the extreme concentration of fundraising activity among a handful of mega-managers.
Through Q3, 224 U.S. PE funds raised approximately $214.4 billion, tracking toward one of the weakest annual totals since 2018 and reinforcing the structural fundraising challenges confronting all but the largest, most established managers. Notably, 76.2% of funds closed year-to-date exceeded their initial targets, indicating strong manager selection bias favoring established brands while thousands of smaller managers face existential challenges.
Paul Weiss’s PE Fundraising at a Glance analysis confirms the bifurcated environment: while aggregate capital raised increased slightly quarter-over-quarter, the 30% decline in fund closes reflects LPs’ flight to quality amid persistent distribution pressures, denominator effect constraints, and heightened performance scrutiny. Average time-to-close for funds remains elevated at approximately 18 months, though this represents an improvement from 2024 levels and suggests that managers with proven track records are experiencing more efficient fundraising timelines relative to historical norms.
MIDDLE MARKET DELIVERS OPERATIONAL OUTPERFORMANCE AMID MEGA-DEAL DOMINANCE
Middle-market private equity deals demonstrated compelling operational outperformance versus larger buyouts over the past decade, according to Hamilton Lane’s November 5 “Insights Chart of the Week” analysis. The research, tracking companies from initial acquisition through current operations, shows middle-market portfolio companies consistently delivered stronger EBITDA growth, revenue expansion, and margin improvement compared to mega-buyout peers, validating the thesis that operational value creation scales more effectively in the $100 million to $1 billion enterprise value segment.
Morgan Stanley’s Private Equity Outlook 2025 reinforces this view, stating that “middle-market companies will likely provide the most attractive opportunities due to the scalability of value creation efforts and increased exit alternatives”. The firm emphasizes that middle-market investments benefit from direct sourcing from founders and families, entry multiples remaining more than 4x EBITDA below large buyouts, and access to a more than 10x larger investment universe than large buyouts, providing greater opportunities to capture a “complexity premium” through manager skill executing nuanced investment theses.
Value Creation Becomes Central to Returns
Both Morgan Stanley and Schroders Capital emphasize that private equity’s historical reliance on multiple expansion and financial leverage must give way to disciplined operational value creation in a higher-interest-rate environment. “We are seeing market participants adjust to a new normal environment of higher interest rates and inflation and lower levels of financial leverage,” Morgan Stanley noted. “Moving forward, we believe a focus on value creation through operational enhancements to drive organic revenue and profitability growth will be crucial for delivering historical PE returns”.
Schroders’ Private Markets Outlook 2025 identifies small and mid-market buyouts and venture capital as “most attractive in private equity” following a correction in fundraising that has been most pronounced in these segments. Small and mid-market buyouts benefit from reduced competition (fewer mega-funds pursuing $100-500M deals), direct sourcing opportunities, lower entry multiples, and differentiated sector exposures underrepresented in public markets, including healthcare, renewable infrastructure, disruptive technology, and specialized industrial services.
SECTOR ALLOCATION: TMT LEADS WHILE INFRASTRUCTURE AND HEALTHCARE SURGE
Technology, Media, and Telecommunications (TMT) led U.S. private equity investment with $285.9 billion through Q3 2025, surpassing recent years and positioning 2025 to achieve the highest TMT deployment since 2021. Consumer & retail followed at $107.8 billion, exceeding 2024 full-year levels, driven by premium brands, direct-to-consumer platforms, and logistics-adjacent businesses.
Healthcare investment reached $73.5 billion through Q3, with particular strength in tech-enabled care delivery models, healthcare IT platforms, and carveout transactions from large healthcare systems seeking to monetize non-core assets. Infrastructure investment surged to $65.1 billion, likely driven by AI data center projects, energy transition assets, and renewable power generation, sectors benefiting from both secular growth trends and government policy support.
Conversely, automotive and transportation investment collapsed to $10.1 billion through Q3 2025, down sharply from $21.3 billion during all of 2024, reflecting supply chain disruptions, margin compression, and sponsors’ concerns about EV transition uncertainties.
INDUSTRY CONSOLIDATION ACCELERATES: “ZOMBIE FIRM” WARNINGS INTENSIFY
The private equity industry’s consolidation trajectory accelerated in Q4 2025, with multiple industry leaders reinforcing dire predictions about the survival prospects for mid-tier and smaller managers. As previously reported, EQT CEO Per Franzén warned that approximately 80% of all private capital firms could become “zombie” entities within the next decade, capable only of managing legacy portfolios without the ability to raise fresh capital.
Ian Charles, co-founder of Arctos Partners, emphasized that firms unable to raise new institutional capital for seven years effectively enter “zombie” status, managing legacy assets with limited capital and shrinking teams. With private equity fundraising entering its third consecutive year of decline and more than 18,000 funds globally now competing for commitments, Bain & Co. estimates current demand outpaces available capital by a 3-to-1 ratio.
Industry leaders including Apollo’s Jim Zelter and KKR’s Robert Lewin have warned of increased general partner consolidation and a narrowing path for smaller or underperforming firms. Rob Lucas, CEO of CVC Capital Partners, stated bluntly: “There are going to be winners and losers… it will all come down to performance”. Harvey Schwartz, CEO of Carlyle Group, sought to provide a more constructive long-term view, emphasizing that “the demand for capital of all forms for the next 5, 10, 15 years in the business that we’re in is only growing,” highlighting global economic expansion and technology-driven investment opportunities.
Zombie Portfolio Companies Present Separate Challenge
Beyond GP-level consolidation, the proliferation of “zombie portfolio companies”, businesses barely generating enough revenue to cover debt servicing costs and unable to invest in growth or innovation, poses material challenges for both PE firms and the broader economy. These underperforming assets tie up capital, labor, and resources that could be more efficiently deployed, depress market prices, discourage new entrants, and create collective debt burdens that pose financial system risks during economic downturns.
Cliffe Dekker Hofmeyr analysis identifies several factors driving zombie company persistence: avoiding realized losses (which impact fund performance metrics and future fundraising), reputational concerns around liquidations, lack of liquidity in stressed markets making exit processes difficult, and complex capital structures involving significant leverage that are time-consuming and expensive to unwind. Continuation funds offer one potential solution by transferring assets to later funds with different investor mixes, though this approach is “very complicated” and “does not deal with the underlying issue”.
OUTLOOK: BIFURCATED RECOVERY FAVORS SCALE AND OPERATIONAL EXCELLENCE
Private equity entered November 2025 with cautious optimism tempered by stark structural realities. Record Q3 deployment ($537.1B globally), accelerating exits ($485.5B U.S. YTD), record secondaries volume ($165B through Q3), and KKR’s record $43B fundraising quarter demonstrate that capital continues flowing through private markets at unprecedented scale.
However, this aggregate strength masks profound bifurcation. Fewer than 100 globally diversified firms are expected to capture approximately 90% of capital inflows in the next fundraising cycle, while 80% of private equity firms face potential zombificationwithin a decade. The lowest quarterly fund close count in five years (205 funds in Q3) combined with persistent LP distribution pressures signal a fundamental industry restructuring favoring mega-funds with diversified strategies, lower costs of capital, and institutional-grade operational capabilities.
PwC’s Private Equity Trend Report 2025 emphasizes that European PE firms expect deal-making conditions to improve (56% of respondents), with nearly half (46%) anticipating more new investments in 2025 than 2024. However, sustained performance will require heightened focus on value creation within existing portfolios as firms face mounting pressure to divest companies held for extended periods, with exit multiples remaining below peak levels and operational improvements becoming the primary driver of returns in a higher-rate environment.
For sophisticated institutional investors, this environment demands precision around manager selection, vintage year positioning, and allocation sizing—favoring tier-one managers with near-term deployment urgency and proven operational value creation capabilities over newer vintage commitments to sub-scale firms. The secondaries market, retail capital flows through 401(k) channels, and continuation vehicles will play increasingly central roles in portfolio construction and liquidity management. The consolidation wave is not a future threat but a present reality reshaping competitive dynamics across the entire private capital ecosystem.
SEQH CAPITAL RESEARCH | Independent Private Markets Analysis