Opportunity in volatility: Private Equity rides the waves
Originally published in October 2025 by Benefits and Pensions Monitor.
Highlights
Heading into 2025, private equity deal buying activity was expected to increase. The economic environment was set to improve, financing markets were supportive, and government policy was favourable. Confidence was also boosted because private equity firms had raised significant funds in the past few years that had not been deployed, improving buying capacity. The market also expected sellers to come to market in 2025 and increase the volume of exits. Due to the sluggish deal making environment that had started in late 2022 and the delayed exit activity in earlier investments, private equity funds felt pressure to improve liquidity from their older funds. However, the optimism and confidence were misplaced as tariffs rocked the world and shook the markets.
Since the first quarter of 2025, the buyout markets have been adjusting to a new, uncertain environment due not just to tariffs and volatile equity markets, but because of government policy and spending as well. The uncertain environment put a hold on new deal activity and has been reversing the upward trend in volumes seen in the first quarter; this could lengthen hold periods, slowing down liquidity coming back from legacy private equity investments. Despite these potentially unfavourable outcomes, there are reasons to be positive.
