Inside the Strategy Room
241. The path forward for private equity
Mar 6, 2025
In this enlightening discussion, Alex Edlich, a senior partner at McKinsey specializing in private equity, and Christopher Croke, a partner leading the Private Capital Practice in London, unpack the latest trends in the private equity landscape. They highlight a rebound in dealmaking and strategies for value creation amid changing market dynamics and rising interest rates. The duo also explores the resilience of mid-market funds, innovative investment strategies, and the shifts in industry metrics, emphasizing a cautious but optimistic outlook for 2024.
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Quick takeaways
- In 2024, private equity exhibited resilience with a 14% rebound in transaction values, particularly in larger buyouts across North America and Europe.
- Amidst fundraising challenges, innovative strategies like separately managed accounts are attracting capital, reflecting limited partners' renewed confidence in private equity's long-term potential.
Deep dives
Emerging Resilience in Private Equity
The private equity industry is showing signs of resilience as it begins to emerge from the challenging years of 2022 and 2023. A notable rebound in transaction values was observed in 2024, with a 14% increase overall, marking it as the third most active year on record. Larger buyouts experienced particularly strong growth, and despite a decline in the number of transactions, significant recovery in value was evident, especially in North America and Europe, highlighting an adaptive market responding positively to changing conditions. Additionally, the exit backlog reached unprecedented levels, suggesting a future readiness by firms to navigate upcoming liquidity challenges.
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