Private equity deal value hits record US$310b as confidence returns: EY analysis

• Deal momentum strengthened as narrowing valuation gaps and improved financing conditions supported record deployment
• Exit activity rose 40% year on year, aided by stronger IPO markets
• Fundraising remained soft, but emerging retail channels and new US 401(k) access point to potential long-term tailwinds

Global private equity (PE) deal activity reached record levels in Q3 2025, with total deal value rising to US$310b, as firms took advantage of narrowing valuation gaps, improved financing conditions and renewed market confidence.

While fundraising remains muted, emerging retail channels and a gradual reopening of IPO markets signal growing momentum across the sector, according to the latest EY Private Equity Pulse Q3 2025.

Record deployment driven by improved sentiment

The third quarter of 2025 marked a significant shift in sentiment for private equity. Rising equity markets, moderating inflation and expectations of rate cuts in 2026 have supported a more constructive dealmaking environment.

In total, 156 deals were announced in Q3, with six transactions exceeding US$10b. Large-scale acquisitions, including the largest LBO of all-time, drove the highest quarterly total on record, underscoring growing appetite for scale and complexity among sponsors.

Peter Witte, EY Global Private Equity Analyst Lead, says:

“Private equity entered the second half of 2025 with renewed conviction. As valuation gaps narrow and financing conditions improve, sponsors are acting decisively, leaning into transformational transactions that balance optimism with discipline. The rebound we are seeing is not just cyclical; it reflects a structural recalibration of confidence across the industry.”

Valuation gaps narrow as deal momentum builds

After more than two years of pricing mismatches, buyers and sellers are increasingly aligned. The survey, shows that two-thirds of General Partners (firms or individuals who manage private equity funds) report that valuation gaps have narrowed, enabling deals to progress more efficiently.

Sponsors are also employing innovative structures, including earnouts and contingent clauses, to manage uncertainty and maintain momentum. Financing conditions have strengthened, with direct lenders remaining active and the broadly syndicated loan market reopening for large buyouts. In the US, syndicated loan issuance reached a record US$404b in Q3, according to the EY analysis.

Sector rotation toward essential industries

Q3 2025 brought a reallocation of capital across industries. Allocations to healthcare and financial services more than doubled year-to-date as investors focused on sectors resilient to trade frictions and macro uncertainty. By contrast, technology investment rose only modestly, reflecting a pivot toward infrastructure and essential services with stable demand.

Exits strengthen as liquidity pressures rise

The report shows that exit activity has accelerated, with US$470b worth announced so far this year, a 40% increase year on year. Pressure for distributions from Limited Partners continues to build, with most General Partners (GPs) rating it between 6 and 8 on a 10-point scale, up from 5-7 last year.

A particularly positive development is the reopening of the PE-backed IPO market. Q3 saw several high-profile listings raise more than US$18b, highlighting improving investor appetite for new issuance from PE portfolios, particularly in healthcare, energy transition and financial infrastructure.

Fundraising challenges persist but new channels emerge

Despite stronger exits, fundraising remains subdued, totalling approximately US$340b year-to-date, around 25% lower than at this point in 2024. However, regulatory changes allowing private market investments within US 401(k) plans could provide a major long-term tailwind. With about US$9t held in defined contribution plans, even small allocations could generate US$500–600b in new capital over time.

In the EY Private Equity Pulse Q3 2025 survey, 90% of GPs expressed interest in developing products for this market, and 24% are already designing offerings, indicating early movement toward broader investor access.

Outlook: GPs signal stronger activity ahead

According to the report, GP sentiment strengthened markedly in Q3. The share of firms expecting exit activity to increase rose from 44% to 61%, the highest level since EY began tracking sentiment two years ago. Three-quarters of respondents also expect deal activity to rise over the next six months, supported by narrowing valuation gaps and improved alignment between buyers and sellers.

Firms are also expanding capabilities:

• 45% expect to hire more investment professionals over the next twelve months relative to an average year
• 53% plan to expand digital transformation expertise over the next twelve months relative to an average year
• 51% are recruiting data scientists and AI specialists

For more insights, please refer to the EY Private Equity Pulse Q3 2025 report: Private Equity Pulse: key takeaways from Q3 2025

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About the data

All data contained in this document is sourced from Dealogic, PitchBook, and EY analysis unless otherwise noted.

The Dealogic data in this report are under license by ION. ION retains and reserves all rights in such data.