Macroeconomic context: between tariff tensions and equity market optimism
The quarter was marked by an initial shock: the US administration's announcement in early April of an across-the-board increase in tariffs, which triggered a rapid market correction. In a matter of days, credit spreads widened and investors reduced their exposure to risk. The postponement of the measures, however, triggered a rebound, buoyed on the markets by solid corporate results and continued momentum linked to artificial intelligence in major technology stocks, as well as stronger-than-expected economic indicators.
- United States: net recovery with +3.0% annualized growth in Q2ᵉ, inflation easing (2.9%), unemployment stable at 4.1%.
- Eurozone: fragile growth of 0.9% expected for the year, penalized by industry. The ECB cut rates in June to stimulate activity.
- Financing: despite a contraction in syndicated loan issues in April, private credit took up the slack, enabling deals to be closed.
This environment has led funds to remain disciplined and selective, but buyout volumes remain high, driven by large transactions in the United States and a dynamic mid-market in Europe.
Global exit markets, IPOs and secondary sales
Exit markets continued to show progress in 2ᵉ quarter, although the pace of recovery remains slower than many investors had hoped. The overall value of M&A exits reached $387 billion in the first half of 2025, up 53% year-on-year. Activity in the second quarter was underpinned by increased participation from strategic buyers, which fuelled a number of significant exits.
Notable examples:
- GTCR sold Worldpay to Global Payments for $24.2 billion.
- Permira sold Informatica to Salesforce for $8.0 billion.
- Insight Partners sold Dotmatics to Siemens for $5.1 billion.
- The Jordan Company sold Silvus Technologies to Motorola for $4.4 billion.
The increase in the value of exits occurred despite a third consecutive decline in the number of announced deals, which stood at 599, a 7% quarter-on-quarter decrease. While quality companies continue to command attractive prices, high interest rates and uncertainty surrounding the macroeconomic outlook continue to limit the scope of what can actually be achieved in the current environment. As a result, the inventory of companies held by private equity ("PE") funds continues to rise, reaching a record level of over 12,500 in the US, according to PitchBook Data, Inc.
IPO markets also rebounded slightly as the quarter progressed. While issuance was weak in April at the time of the tariff increase announcement, the second half of the quarter saw 13 PE-backed companies go public, including six venture capital technology IPOs with valuations in excess of $1 billion.
Against a backdrop of slowing traditional exits, the secondary market continued its strong growth. According to Jefferies data, global secondary market volume reached $103 billion in the first half of the year, up 51% on the same period in 2024, and the largest half-year total on record. The improvement in prices strengthened opportunities for LPs seeking to rebalance their portfolios and resolve over-allocation issues via the LP secondary market. The average price observed across all private market strategies reached 90% of NAV in the first half, its highest level since 2021. This brought the total value of secondary LP transactions to around $56 billion over the period, up 40% year-on-year.
Public and corporate pension funds accounted for almost half of the total, including several multi-billion-dollar portfolio sales announced in the second quarter. The GP-led market posted even stronger growth, up 68% year-on-year, supported by an increasing amount of capital dedicated to this strategy. This influx of capital has enabled GPs to carry out larger, more complex transactions. In the second quarter, this included a $3.1 billion single-asset continuation vehicle raised by New Mountain Capital for its investment in healthcare company Real Chemistry, and a £2.3 billion multi-asset vehicle raised by European buyout manager Inflexion.
US buyout market: relative slowdown but sustained activity
In the United States, buyout activity dipped slightly in the 2ᵉ quarter, with $68.6 bn in transactions (-17% vs. 1ᵉʳ quarter), but remains on the rise year-on-year: the half-year total reached $152 bn, up 14% on the 1ᵉʳ half-year 2024, on track to be among the three best years on record. These gains were largely driven by deal size rather than volume, with the number of deals remaining relatively low. Thus, the bulk of the annual improvement came from large-cap transactions: the five largest buyouts announced up to June accounted for 42% of overall activity. Notable transactions in Q2ᵉ:
- Thoma Bravo carve-out of Jeppesen (Boeing) for $10.6 billion.
- 3G Capital take-private of Skechers for $9.4 billion.
- Silver Lake buys a majority stake in Altera (Intel) for $8.8 billion.
Despite a slowdown in the syndicated debt market in April, direct lenders remained active. According to PitchBook LCD, 86% of new LBOs were financed by the direct lending market in Q2ᵉ, including a $4.0 billion unitranche loan for Jeppesen led by Apollo and Blackstone.
In the 1ᵉʳ half-year to 2025, the average price of buyout transactions reached 11.8x EBITDA according to PitchBook LCD, compared with 10.9x in 2024. This price increase reflects the fact that only very high-quality companies are selling in an uncertain macroeconomic environment. Managers remain disciplined and cautious on companies exposed to consumption or tariff changes, although it's worth noting that buyout activity increased in the 1ᵉʳ half-year in industrials (15% of volumes), healthcare (18%) and energy (18%), while technology, despite its low exposure to tariff barriers, saw its share decline: from 42% on average over the last five years to 28% in the 2ᵉ quarter of 2025.
This discipline was also reflected in the more cautious structuring of deals in the 1ᵉʳ half-year:
- Average financial leverage: 5.0x EBITDA (vs. 5.5x 5-year average).
- Cash interest coverage: 2.7x (vs. 2.3x in 2024).
Europe: a clear slowdown, except in the mid-market
After a vigorous 2024, European buyout activity fell in Q2ᵉ 2025 to €25.9bn according to LSEG Data & Analytics, down 25% on the previous quarter and 51% year-on-year. The contraction is concentrated on large-cap transactions (enterprise value over €1bn): aggregate value falls to €11.2bn (-49% on the 1ᵉʳ quarter). Several of the quarter's big deals were add-ons rather than platforms, illustrating increased caution: HornetSecurity (€1.8 bn) acquired by a Thoma Bravo portfolio company; Regina Maria (€1.1 bn) acquired by a platform backed by CVC and Hellman & Friedman. According to PitchBook, add-ons will account for over 1/3 of total value in Q2ᵉ 2025 (vs ~1/4 a year earlier).
Conversely, the mid-market remains very active (€14.7 billion in Q2ᵉ, its highest level since the end of 2022), reflecting a shift in opportunities towards more affordable deal sizes.
The UK & Ireland are once again the most active region (38% of activity). Three of the five biggest deals of the quarter involved British and/or Irish companies, including the largest: OSTTRA Group acquired by KKR ($3.1 billion). Public-to-private delistings were a key feature of the British market: Hargreaves Lansdown was formally delisted ( CVC / Nordic Capital acquisition), while Advent and KKR competed for Spectris (transaction completed shortly after the end of the quarter).
L’émission primaire high yield européenne atteint 25,5 Md€ au 2ᵉ trimestre (vs 19,2 Md€ au 1ᵉʳ trimestre) — deuxième plus haut total trimestriel en plus de trois ans. Cette hausse est intervenue malgré un pic temporaire des spreads début avril (BB € > 270 bps), avant de revenir < 220 bps en fin de trimestre. Le mouvement a coïncidé avec la détente de l’inflation et la baisse de taux de la BCE en juin.
Private Equity in Asia: business remains sluggish despite a slight upturn
Private equity investments in Asia remained moderate during the 2ᵉ quarter: $16.5 bn in transaction value (+2.7% vs. 1ᵉʳ quarter) for 1,077 investments, according to Mergermarket. The 1ᵉʳ half-year to 2025 totaled $32.6 bn, the lowest half-year since the 2ᵉ half-year to 2013, reflecting the volatility and uncertainty associated with tariffs. Despite a slight recovery in the mid-cap buyout and growth segments, the stagnation is mainly due to the absence of large-cap deals. However, the market is showing signs of potential recovery, with several major deals announced but not yet closed: Santos buyout (A$29bn/$18.7bn) by an ADNOC-ADQ-Carlyle consortium; carve-out of York Holdings by Bain (¥815bn/$5.5bn); carve-out of Mitsubishi Tanabe Pharma (¥510bn/$3.3bn) also led by Bain.
IPOs in Asia - still below historical standards - began to thaw in Q2ᵉ: 153 companies raised $17.8bn, 2x more than in Q1ᵉʳ and almost 3x more than in Q2ᵉ 2024. Hong Kong is back in the lead, driven by CATL (the world's #1 EV battery manufacturer), which raised HK$41bn ($5.3bn) via a dual listing - the biggest IPO on the square since 2021. In addition to CATL, three other companies raised over $1bn in the 2ᵉ quarter.
Following on from GP-led record 2024 worldwide, Asian GPs are making greater use of continuation vehicles to generate liquidity while retaining their best assets. In Q2ᵉ, IDG Capital (China) finalized a $500m multi-asset continuation vehicle (13 onshore/offshore assets, including ByteDance as its main holding). Then Multiples Alternate Asset Management (India) closed India's largest multi-asset continuation fund at $430 million, without syndication. Asia still represents only a small fraction of the growing global secondary market, but acceptance of this channel is growing among GPs and investors.
Fundraising: strong recovery dominated by buyouts
Global PE fundraising recorded its best quarter in two years, totaling $148 billion (+22% vs. 1ᵉʳ quarter), according to LSEG Data & Analytics and Pathway Research. Despite this rebound, overall activity remains below the levels seen between 2020 and 2023, as the market continues to cope with limited distributions in a context of sluggish exits. The result is a marked polarization: the most sought-after funds are experiencing competitive and rapid processes, while most other GPs are facing longer lead times and difficulties in broadening their investor base. Many LPs remain affected by over-allotment problems, leading some to slow the pace of commitments and concentrate their available capital on larger, more experienced managers. Thus, in Q2ᵉ, Thoma Bravo XVI ($24.3 bn) and Thoma Bravo Discover V ($8.1 bn) accounted for 22% of amounts raised.
As in 2024, the fundraising market remains very buyout-oriented in the 1ᵉʳ half of 2025. Buyout funds raised $96.2 billion in the 2ᵉ quarter (or 65% of total capital). This momentum was driven by the closings of the aforementioned Thoma Bravo funds, as well as Veritas Capital IX ($13.3 bn) and Linden Capital Partners VI ($5.4 bn). Several large funds remain in the market, notably KKR North America XIV (target $20.0 bn) and Clearlake Capital Partners VIII ($15.0 bn).
Within Buy-Outs, the market favors managers with differentiating value propositions (sector specialization, distinctive operating models).
Co-investments are becoming increasingly important for many LPs, perceived as a means of increasing exposure to quality managers at lower cost. Conversely, venture capital activity remains weak: $40.5bn raised in the 1ᵉʳ half-year (-20% vs. 1ᵉʳ half-year 2024), on track to be the weakest year since 2017.
Conclusion
The 2ᵉ quarter of 2025 confirms the resilience of private equity in an unstable macroeconomic environment. In the United States, activity remains buoyant, dominated by large transactions financed by private credit, while in Europe, the slowdown in large-cap contrasts with a more dynamic mid-market.
Exits are progressing, the secondary market is regaining liquidity and buyout fundraising is reaching robust levels. While statistics for the half-year show a relative decline in technology transactions, the new economy sectors - software, healthcare and B2B services - remain best placed to generate sustainable growth.
At the same time, the private equity industry itself is consolidating: a small number of GPs now capture the bulk of capital, while some players, despite good past performances, could disappear if they fail to succeed in their next round. This underlines the importance of not limiting a manager's analysis to past performance when selecting a fund to invest in for 10 years. For a private investor, it is essential to be accompanied by professionals capable of identifying the most solid and differentiating managers, and building a disciplined exposure focused on the growth sectors of the new economy.
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