Private equity deployment reaches US$905b as mega deal momentum accelerates: EY analysis

• Deployment surged 57% year-on-year (in Q4 2025) amid narrowing valuation gaps and stabilizing macroeconomic conditions
• Exit values climbed more than 50% as corporate acquirors returned to the market
• Fund manager sentiment for 2026 at two year high, with 80% expecting acquisition activity to rise

Global private equity (PE) activity strengthened sharply through 2025, culminating in one of the sector’s strongest years on record. Deal value rose 57% year-on-year to US$905b, driven by a significant rebound in mega transactions, improved financing conditions and renewed alignment on valuations, according to the latest EY Private Equity Pulse Q4 2025.

Exit markets also turned decisively upward, with total exit value climbing more than 50% for the year, amid heightened strategic activity and a gradual reopening of the IPO window. While fundraising declined in 2025, sentiment for 2026 is increasingly constructive as liquidity recovers and investor confidence builds.

Record deployment as confidence strengthens

After two years of recalibration, 2025 marked a turning point for private equity. Stabilizing interest rates, easing inflation and greater macro visibility allowed buyers and sellers to reconnect on pricing expectations.

A total of 13 mega deals (US$10b+) were announced during the year, the highest on record, as sponsors leaned into high conviction, scale oriented opportunities. Deal volumes rose 15%, underscoring broad based re engagement across the industry.

Ivan Lehon, EY Global Private Equity Leader, says:

“2025 demonstrated what happens when confidence, liquidity and clarity begin to return at the same time. Sponsors acted decisively, focusing on fewer but larger and higher quality opportunities. This momentum is carrying into 2026, with firms entering the year more optimistic, better aligned with sellers and more disciplined in underwriting than we’ve seen since before the pandemic.”

Valuation gaps narrow, enabling more efficient dealmaking

The EY Pulse survey shows that the industry’s long running valuation disconnects began to ease meaningfully in 2025. Narrowing pricing gaps were cited as one of the top catalysts for renewed deal flow.

Sponsors increasingly used structured solutions, including earnouts and hybrid capital, to manage uncertainty and increase flexibility. Financing conditions improved as direct lending markets remained active and syndicated loan issuance broadened, particularly for large buyouts.

Exits accelerate as corporates return

Exit activity rose sharply, supported by stronger strategic appetite and improving public market conditions.

• Trade sales reached US$481b, rising more than 75% by value
• Secondaries climbed to US$217b, backed by over US$1.6t in dry powder
• PE backed IPO value nearly tripled in 2H 2025 to US$28.1b

Corporate acquirors led the rebound, driven by strategic demand for scale, technology and operational capabilities.

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

“The resurgence in exits, particularly to strategics, is one of the most meaningful developments for the industry. It is helping to release long delayed liquidity and it is giving GPs the confidence they need to return to market. Investors are signalling that the deals done in 2025 are among the strongest vintages we’ve seen in years.”

Looking ahead to 2026, industry sentiment is strongly positive:

• 80% of GPs expect acquisition activity to increase
• 72% expect exits to rise: the highest level since tracking began
• Nearly half expect 2025 vintage deals to outperform those from 2023–2024
• AI enabled business models and digital infrastructure rank as the most attractive investment themes

Ivan says: “Although geopolitical risks remain, the balance of indicators suggests that PE is entering 2026 with stronger momentum, greater alignment, and heightened conviction in value creation.”

EY leaders will discuss the latest PE trends and insights from the EY Private Equity Pulse - including deployment dynamics, exit pathways and the evolving outlook for 2026 - at the European Private Capital Summit on 25 February.

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