EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
Recent Searches
Trending
-
M&A outlook: stronger US deal market in 2026 despite mixed economic signals
28 Oct 2025 Growth -
US Healthcare Cyber Resilience Survey: Why elevating cybersecurity to a strategic priority can drive transformation
03 Nov 2025 -
Beyond cost cutting: AI as the ultimate growth engine
03 Nov 2025 Consulting
The surge in US PE deal1 value in the quarter (3Q25) to record levels was driven by mega-deals
Deal¹ value in the quarter spiked on the back of mega-deals and cheaper debt. LBO term-loan spreads fell to post-GFC lows (broadly syndicated loan (BSL) spreads compressed to ~316 bps in Q3, the lowest since 2007). Equity capital continued to make up more than half (55%) of total transaction value as US buyout multiples dropped to 11.1x (EV/EBITDA) for the trailing 12 months through September versus 13.7x in 2024.
The setup for Q4 and early 2026 is positive but measured: lower spreads, a narrowing valuation gap, rising CEO confidence and improving exit channels. However, the path of interest rates, AI execution and related risks, along with the pace of fundraising will guide the outcome. On balance, the outlook is quite promising and firms that pair tight underwriting with practical innovation should be well placed to outperform.
Source: Q3 PE Pulse survey by AlphaSights. 1Deals (deal activity) indicates US PE significant deals i.e. deals worth US$100m and above
Exits through the first three quarters rebounded to the strongest levels since 2022
Through September, sponsors recorded 489 US exits totaling $254b, surpassing all of 2024. IPOs reopened as a path, with PE-backed listings roughly quadrupling year to date (22 through 3Q25 vs. five in 2024). While exit proceeds slowed in the third quarter, exit counts rose nearly 18% QoQ. Dividend recaps spiked to ~$24.7b as sponsors sought partial liquidity. Since the beginning of 2024, PE-backed companies have raised more than $125b in the BSL market to support dividend payouts, the highest level for any two-year period.
Source: Q3 PE Pulse survey by AlphaSights
Sentiments for a rise in exits nearly doubled in the 3Q survey and deployments expectations rebounded
The valuation gap is narrowing as 66% of GPs surveyed (EY US PE Pulse) reported buyer-seller spreads have tightened moderately to significantly over the past year, and a majority (57%) feel confident they can meet planned exits at acceptable valuations.
Source: Q3 PE Pulse survey by AlphaSights
Fundraising accelerates for larger funds with higher re-ups and median fund size reaching a record
YTD capital fundraising totalled $252b across 309 funds, lowest 3Q-YTD tallies since 2020. Notably, over three-quarters (76.2% according to PitchBook) of these funds outperformed their predecessors in size, boasting a remarkable median increase of 43.4%, the highest in recent years. The median fund size reached a record $183 million, underscoring investors’ preference for larger vehicles and high-quality opportunities. As deal activity and exits gain momentum, the fundraising environment is poised for further acceleration, signalling renewed confidence in the market.
Source: Q3 PE Pulse survey by AlphaSights
Technology is the top sector for deployment in the US, supported by investor confidence (e.g., AI) and limited risk from tariffs or macroeconomic issues
Portfolio companies are turning more positive and acting on it. In the EY-Parthenon September CEO Outlook Survey, 53% of US PE-backed CEOs were “very optimistic” about the next 12 months (vs. 36% in May). Plans to invest are rising, with 47% in September compared to about a third (33%) in May—a shift that doesn’t complicate the comparison. At the same time, over two in five CEOs flag technology disruption and AI integration as their top near-term challenge. Managed well, these pressures can be a source of productivity and margin gains, supporting sponsor playbooks and exit readiness.
Source: Others² include real estate, retail, telecom and materials
US-based GPs believe that incremental growth and transformation (innovation) are the two most likely scenarios to be driven by AI
In the EY US PE Pulse survey, 40.7% expect AI to deliver steady productivity gains by 2030, compared to 40.3% globally. While nearly a third (32.5%) anticipate more transformational change that reshapes how work gets done, versus 28.5% globally. Either path argues for embedding AI into diligence, pricing, portfolio value creation and the exit story.
Source: Q3 PE Pulse survey by AlphaSights, based on analysis of submissions from US respondents only
US GPs plan to continue strengthening their investment teams, tech and data/AI focused roles are more coveted
US GPs plan to keep building bench strength, but the emphasis is clear: technology/digital transformation and data science/AI roles are the most likely to see headcount increases, reflecting where firms expect the biggest lift in underwriting speed and portfolio value creation. This tilt lines up with today’s deal mix and operator needs. Tech remains the top deployment sector, and PE-backed CEOs increasingly cite AI integration as a near-term priority, so adding in-house capability is a practical response. Meanwhile, investment professionals are set to hold steady as managers prepare for continued deployment and improving exit conditions.
Source: Q3 PE Pulse survey by AlphaSights, based on analysis of submissions from US respondents only
A large majority (61%) of GPs are exploring products for 401(k) plans
A further boost may come from defined contribution access. The recent Presidential executive order enabling 401(k) plans to include alternatives, including private equity, could augment fundraising in the coming years. EY professionals estimate potential flows of $550b–$600b over time. Over 90% indicated some level of interest with a large majority (61%) exploring or designing DC-friendly products with demand from plan sponsors (52%) most likely to set the pace.
As the Trump Administration recently made it easier for PE vehicles to be offered through retirement plans such as 401(k)s, to what degree are you or would you consider developing products for these types of vehicles?
Source: Q3 PE Pulse survey by AlphaSights
Source: Q3 PE Pulse survey by AlphaSights
Our latest thinking
Private Equity Pulse: key takeaways from Q3 2025
Private equity exits reach a three-year high as firms seize opportunities to turn strategic value creation into realized returns.
What can private equity do now to finish strong?
Private equity firms exiting assets in the next 12 to 24 months should focus on exit preparation strategies, a new EY study shows. Learn more.
Private equity’s transformation: the perpetual evolution
Discover how PE firms are evolving with new investment strategies and what that means for business operations.