PE investment has been slow over the last few years, with funds facing challenges in finding exits. The low exit volume has led to longer holding periods, slower fund lifecycles, and limited new capital for investment.

According to a Harvard study, the average holding period rose from 4.2 years across 2021 and 2022 to an average of 5 years across 2023 and 2024.

Despite these challenges, there is growing optimism for 2025. In 2024, many PE firms turned to credit markets, leveraging structured and other hybrid financing solutions to create value. Additionally, firms worked together to form investment syndicates, enabling them to de-risk investment and target larger companies.

According to Pitchbook, total deal value in the US increased 19% year-on-year in 2024, with total deal count rising by 13% year-on-year. In Europe, total deal value increased by 24% year-on-year, while the deal count held steady. This progress was driven by creative dealmaking, a trend expected to continue into 2025.

Macroeconomic factors also appear favourable for the year ahead. Inflation – which remains relatively steady in the US and Europe, despite a slight uptick at the end of 2024 and beginning of 2025 – along with lower interest rates and tighter credit spreads are predicted to drive 2025 PE tailwinds. Additionally, regulatory pressures on PE are expected to ease, and investor risk appetite appears to be increasing.

With these dynamics in play, we expect to see the positiv