Weekly Private Equity Edition
Volume 7
Private Equity Edition
SEQH Capital Research – Weekly Intelligence Brief
Week Ending January 2, 2026
Executive Overview
Private equity exited 2025 with clear positive momentum: deal value has rebounded toward pre-2022 levels, exit markets are reopening, and secondaries and private credit have become central pillars of the ecosystem. Global buyout deal value in Q3 2025 reached roughly the strongest quarterly level since 2021, with November deal value up over 30% year-over-year even as deal counts declined, evidencing a shift to larger transactions. At the same time, fundraising remains selective and highly skewed toward established managers, while dry powder, aging capital, and heightened regulation (particularly in healthcare) are shaping strategy and capital deployment.
For both institutional and sophisticated retail allocators, the current setup is characterized by:
A renewed large-deal cycle and improving financing conditions.
A still-challenged, but healing, fundraising and exit environment.
Structural growth in secondaries and private credit as core allocation sleeves.
Heightened regulatory and macro risk that demands disciplined underwriting.
I. Deal Activity & Mega-Transactions
Deal volumes recover with bigger ticket sizes
Global private equity deal value climbed 31% year-over-year in November 2025 to just over $50 billion, while total 2025 deal value had already exceeded the prior year by late autumn. Q3 2025 buyout value reached the highest quarterly total since the 2021 peak, putting full-year buyout deal value on track to surpass $1 trillion for the first time since 2022. Despite this, overall deal counts remain lower, reflecting a deliberate pivot toward fewer, larger, higher-conviction transactions.
Large deals above $1 billion grew an estimated 90–100% year-over-year and now account for roughly half of total activity versus about one-third in 2024. This is supported by a material improvement in the financing backdrop: high-yield spreads have tightened by roughly 170 basis points over the past two years, and leveraged loan markets have reopened for quality credits at more attractive terms. Operational performance of portfolio companies has also strengthened; for example, one leading manager reported U.S. PE portfolio company revenues growing around 9% year-over-year in Q3 2025, providing a fundamental basis for renewed underwriting confidence.
Headline deals signal a new cycle
Several 2025 transactions underscore the scale and themes driving capital deployment:
A $55 billion take-private of a global gaming publisher marked the largest leveraged buyout in history, demonstrating both the availability of very large equity checks (including sovereign capital) and debt appetite for top-tier assets.
A $23.7 billion leveraged buyout of a major pharmacy and retail chain, funded with over $18 billion in layered debt and preferred securities, highlighted sponsors’ willingness to tackle complex corporate transformations in sectors undergoing structural change.
A $40 billion AI-focused data center platform acquisition, backed by a consortium of asset managers and big tech companies, showed the strategic centrality of compute and data infrastructure as a long-duration investment theme.
A $27 billion AI data-center joint venture, financed largely via private credit, became the largest private credit deal ever, illustrating how non-bank lenders are stepping into roles once occupied by syndicated loan desks.
A ¥810 billion (about $5.5 billion) consumer carve-out in Japan, the country’s largest in that category, underscored ongoing corporate portfolio rationalization in Asia and the opportunity set in conglomerate spin-offs.
Platform vs. add-on mix
While mega-platform deals anchor the headlines, add-on acquisitions continue to dominate overall volume. Add-ons accounted for roughly three-quarters of buyout activity in mid-2025, meaningfully above the five-year average, indicating that sponsors are still leaning heavily into roll-up strategies and buy-and-build execution around existing platforms. This approach allows faster deployment of committed capital with lower execution risk, which is particularly attractive in an environment of elevated valuation dispersion and still-evolving macro signals.
II. Fundraising, Dry Powder & LP Behavior
Fundraising: slow, selective, and skewed
Global PE fundraising remains subdued relative to historic peaks. Capital raised in Q3 2025 was a bit over $300 billion across slightly more than 400 funds, but the full-year 2025 run rate points to a total well below prior-cycle highs and a fourth straight year of “fundraising funk.” The number of funds closing in Q3 dropped more than 30% quarter-on-quarter, and median time-to-close has stretched beyond 17 months.
The fundraising market is heavily bifurcated:
Roughly 85–90% of capital is going to experienced managers, with the largest funds capturing about a quarter of all commitments in recent quarters.
Emerging managers and smaller franchises face extended timelines and tougher due diligence as LPs consolidate relationships.
LP behavior is shaped by distribution shortages. Many institutions are now in the fourth year of lower-than-expected distributions, constraining their ability to make new commitments and forcing more deliberate pacing. This has been one of the primary brakes on aggregate fundraising rather than a fundamental loss of faith in the asset class.
Dry powder and the deployment challenge
Despite slower fundraising, buyout dry powder remains elevated at roughly $1.2 trillion, with an increasing share classified as “aging” (four years or more since fund close). Aging capital now comprises nearly a quarter of total dry powder, up from about one-fifth a few years ago, creating mounting pressure on managers to put money to work within fund investment periods.
This context increases the importance of:
Disciplined underwriting to avoid style drift or overpaying merely to meet deployment targets.
Creative structures (club deals, minority stakes, structured equity) that can enable deployment without sacrificing downside protection.
Sector and thematic specialization, where managers can still find mispriced complexity or growth despite competitive capital.
LP sentiment: committed but more demanding
Institutional appetite for private equity remains strong: nearly all large LPs intend to maintain or increase their PE allocations over coming years, and public pensions report private equity as their top-performing major asset class over the last decade, with median annualized returns in the low-teens. However, LPs are increasingly focused on:
Concentrating capital with fewer, higher-conviction managers.
Diversifying by geography (with Europe and the UK gaining favor) and by strategy (core buyout, growth equity, secondaries, and private credit).
Structuring more co-investments and SMAs to improve fee and governance outcomes, particularly among family offices and sovereigns.
Family offices are a notable incremental allocators: over two-thirds now invest directly or through co-investments, with a rising share expecting to make six or more direct deals annually and to expand private markets exposure within overall portfolios.
III. Exits, IPOs & Continuation Vehicles
