Will exit activity surge or sputter in 2025?
This week, Buyouts published its December cover story featuring a panel of five private equity leaders – three GPs and two LPs – who shared their insights on the market outlook for 2025.
The tone of the commentary, to use a well-worn phrase, was “cautious optimism”. The general view is dealmaking should benefit from an improving macro picture and some narrowing of the valuations gap, at least compared to the depths of 2023.
These factors probably helped spur solid US deal activity this year. But much of this reflected only “the tip of the iceberg,” TPG ’s Nehal Raj said.
“There’s been a big bifurcation between the highest-quality assets, which have sold at premium prices, and everything else, where there was largely no trade,” he said. For Raj, an important question is what happens to “the rest of the iceberg.”
“The rest of the iceberg” refers in the main to vast unrealized assets sitting in private equity portfolios. Many of these are companies backed in the ebullient period around the 2021 vintage, when trades occurred at what seems in hindsight to be extravagant valuations.
Going into 2025...