Abbott H1 2025 Private Equity Market Overview

OVERVIEW

Financial markets in the U.S. surged by more than 20% in the second quarter of 2025, led by NASDAQ’s 30% increase, while European markets generated mid-teen percent returns.  More specifically though, those gains are all measured from the quarterly nadir on April 8^th to June 30^th.  For the quarter as a whole, U.S. returns were more modest although still strong (S&P 500: 10.6%, Russell 2000: 8.1%, NASDAQ: 17.8%), and Europe was up slightly (Stoxx: 1.4%, FTSE: 2.7%).  The introduction of tariffs by the Trump Administration on April 2^nd began a selloff that sent equity markets into correction (and in the case of the Russell 2000, bear market) territory.  The S&P 500 saw its worst four-day point loss ever.  Unusually, bond markets around the world responded in concert with equity prices, driving yields higher.  The subsequent decision by the U.S. on April 9^th to pause the tariffs precipitated the rapid rebound in prices that we teased you with in the opening sentence.

The private equity markets appear to have encountered confused seas through the first half of the year.  Fundraising activity was generally down across venture capital, U.S. buyouts and European buyouts overall.  Middle market buyout fundraising in Europe was a notable exception, having raised nearly as much in 1H 2025 as in all of 2024.  Deal and exit activity for venture capital and buyouts in the U.S. gained some momentum and are on course to end the year higher than in 2024, but activity in Europe remained muted. 

Private equity investors generally take a long-term view of the markets, recognizing that markets move up and down, both daily and in longer cycles.  We understand that the path from here to the future will not be straight or smooth.  Yet our experience and our expertise compel us to believe that the best way to reach a goal is to keep our eyes resolutely focused on it, despite the storms surrounding us.

That’s the long-term optimist’s view, and we endorse it.  That said, we reiterate the sentiment from our Q1 2025 Private Equity Market Overview: Private equity is insulated, but not immune from macro challenges.  No one loves uncertainty, but good business leaders make good decisions with incomplete information every day.  And private equity-backed businesses have attracted some of the best business leaders globally.  It’s nice to have fair winds and following seas.  Right now, we don’t, so we will rely on a well-charted course, experience and expertise to ply the unpredictable waters ahead. 

VENTURE CAPITAL

U.S. venture capital fundraising remained challenged through H1 2025, with over $26 billion raised by 238 funds.  For perspective, fundraising is on pace to have its slowest year since 2017 by volume, and that capital will have been collected by the fewest number of funds in over a decade.

Deal activity in Q2 2025 was down versus Q1 2025, but the first quarter numbers were skewed by OpenAI’s massive $40 billion round in March.  That Q1 2025 transaction alone equates to over 57% of Q2 2025’s deal value.  In terms of deal count, the annualized first-half figures would represent the third-highest number in over a decade (behind the heady days of 2021 and 2022).  Median pre-money valuations rose across all stages from pre-seed to C rounds.  Fundraising dollars as a percentage of deal value was at its lowest in over a decade at 16%, compared to the previous decade average of 53%.  As such, dry powder in the market has come down from 2023 highs.

Exit activity has been ramping up in the U.S. venture market with a total value of $120 billion across 756 transactions (includes estimated exit count of 107).  Through the first half of the year, exit value and exit count are on pace to exceed each of the prior three years following market highs in 2021.  In H1 2025, activity was also significantly above H1 2024’s exit tally of $79 billion across 595 transactions.  The IPO market was mixed, with a below-average number of new issuances in H1 2025, but with more capital raised than each of the preceding three years ($44 billion in the first half of 2025 versus an average of $25 billion for each of the prior three full years).  A healthier exit environment may lead to a rebound in the fundraising market.

U.S. PRIVATE EQUITY

U.S. private equity fundraising remained under pressure in the first half of 2025 with $149 billion raised across 146 funds, putting the market on pace for a decline from the $333 billion raised across 476 funds in 2024.  While flagship vehicles from established managers still found support, the bar for capital formation amongst middle market managers, defined by Pitchbook as those raising funds between $100 million and $5 billion, appears to have risen.  In the year-to-date period, middle market managers closed 74 funds worth $60 billion.  This represents 40% of the total capital raised in H1 2025, which is well below the five-year annual average of 55%.

Dealmaking in H1 2025 showed continued momentum, however.  During the period, managers closed on $507 billion of aggregate deal value across an estimated 4,429 transactions (includes estimated deal value of $57 billion and deal count of 946 in H1 2025), representing a 29% increase in value and an 8% rise in count year-over-year, respectively.  Add-ons continued to represent a significant amount of activity, at 74% of deal count, slightly above the five-year average of 73%.  Median valuation multiples for U.S. buyouts, meanwhile, stood at 12.8x EV / EBITDA.  This is slightly below 2024’s 13.0x but comfortably above the 2023 trough of 11.8x.

While exit activity cooled in Q2 2025 following a strong Q1 2025, the annualized H1 2025 figure is still on track to outpace the prior year.  Aggregate H1 2025 exit value reached $340 billion across 732 transactions (includes estimated deal value of $28 billion and deal count of 262) compared to a total value of $384 billion across 1,393 transactions in 2024 (includes estimated deal value of $9 billion and deal count of 83).  However, Q2 2025’s slowdown in count and value may underscore the persistent fragility in the exit markets.  The quarter recorded 314 exits, the lowest over the past four quarters, and experienced 46% and 24% quarter-over-quarter decreases in exit value and count, respectively, potentially representing looming uncertainties around tariffs and sector-specific headwinds.

EUROPEAN PRIVATE EQUITY

European private equity fundraising in H1 2025 came in significantly weaker than in H1 2024 with €54 billion raised across 56 funds compared to €92 billion raised across 67 vehicles.  The drop, particularly in volume, is partially the result of the lack of large cap funds closing in the first half of 2025.  The mid-market segment (Abbott defines as funds between €1 billion and €5 billion) on the other hand has gained significant share in 2025, with €36 billion raised in H1 2025 alone, compared to €36 billion for 2024.  We expect the mid-market to continue to have a strong second half of 2025, and a partial recovery of the large-cap market, with several European managers preparing to launch after the summer.

Deal activity saw a dip in Q2 2025 compared to Q1 2025 in terms of deal value, with €127 billion of deal value closing (includes estimated €29 billion of deal value and 632 deal count), marking a quarter-over-quarter decrease of 10%.  Deal count on the other hand was slightly up by 3% over the same period.  The beginning of Q2 2025 was marked by uncertainty caused by the possibility of potential trade tariffs imposed by the U.S. administration. 

With respect to realizations, activity dropped in Q2 2025 compared to Q1 2025 with exit value down 23% quarter-over-quarter and exit count down 11% quarter-over-quarter.  Similar to deal activity, investors may have taken a more cautious approach in the wake of potential trade tariffs in April 2025.  The result of the continued slow exit market is an increase in holding time of PE-backed companies with a median holding time of 3.6 years in 2025, which compares to 3.4 years in 2024, and 3.1 years in 2023. 

SECONDARIES

Global secondary market volume of $103 billion in H1 2025 was the most active six-month period in history, representing a 51% increase year over year from the $68 billion of volume in H1 2024.  As per Jefferies, this increase was driven by significant increases in both GP- and LP- led transactions.  On the LP side, which represented 54% of total secondary market activity, sellers were motivated primarily by a desire to pursue opportunistic liquidity and general portfolio rebalancing, driven by strong pricing.  While 48% of sellers by volume were pensions or sovereign wealth funds, the amount of selling from endowments and foundations also increased meaningfully, accounting for 16% of volume (up from 7% in H1 2024).  This selling may have been driven by discussions around the potential increase in the endowment excise tax by 2026.  While mosaic solutions continued to remain a meaningful part of the market, the average number of buyers per transaction declined to 1.9 in H1 2025, down from 2.3 in H2 2024.

GP-led transactions also increased substantially in H1 2025 to $47 billion, a 68% increase in volume over the previous year.  Of that $47 billion in volume, the vast majority of transactions were continuation vehicles (~87%), with the remaining balance taking the form of structured equity, fund financing, or tender offers.  As in prior years, buyout CVs remained the majority of the market (~60%), with single asset transactions representing ~42% of CV volume.  Deals continued to be priced attractively, with nearly 90% of single asset CVs pricing above 90% of NAV.  The number of large GP-led transactions also rose considerably in the first half of the year, with eight CV transactions with sizes of $2 billion or larger.  This equaled the total amount of deals of that size for all of 2024.  As of H1 2025, Jefferies estimates that nearly 75% of the fifty largest global GPs have utilized CVs at some point to provide liquidity to their LPs.  As the GP-led market continues to grow, it now represents a substantial amount of exit opportunity, at ~19% of all sponsor-backed exit volume.  H1 2025 also saw an increase in GP alignment, with cross-fund commitments in 34% of CVs, versus 30% in 2024.

LP secondary market pricing was more mixed in the first half of the year, with buyout pricing remaining flat at 94% of NAV, while venture pricing increased significantly by 300 basis points to 78% of NAV.  Notably, the amount of venture / growth LP volume increased dramatically, more than doubling to 22% of volume from 2024.  However, even with that substantial increase, buyout funds continued to represent the majority of the market at 53% of volume.  In the first half of the year, the majority of transactions occurring were for post-2017 vintage funds.  In general, newer vintages continued to generate the highest pricing, with the largest discounts coming from older vintages (particularly pre-2014).

ADDITIONAL CHARTS