Is Private Equity Growing? Market Analysis, Trends & 2026 Outlook
Private equity has reached unprecedented scale, with global assets under management approaching $10.5 trillion as of 2025 and US deal activity hitting $1.2 trillion—the second-highest on record. Despite persistent fundraising challenges that saw capital raising drop to levels not seen since 2020, the industry demonstrates remarkable resilience through record deal activity, surging exits, and continued expansion into new markets and strategies. For finance professionals considering private equity careers or investors evaluating opportunities, understanding the industry's growth trajectory is essential.
The Short Answer: Yes, Private Equity Is Growing
Private equity is experiencing sustained growth across multiple dimensions—assets under management, deal activity, exit momentum, and investor diversity. After facing challenges in 2022-2023 following pandemic-era peaks, 2025 marked a decisive rebound in dealmaking and exits, with 2026 projections indicating continued expansion despite ongoing fundraising headwinds.
Key Growth Indicators
This growth isn't merely a return to pre-pandemic levels—it represents fundamental expansion driven by new capital sources, innovative fund structures, and evolving investment strategies, even as fundraising faces its most challenging environment in years.
Historical Context: Two Decades of Remarkable Growth
Private equity has experienced extraordinary expansion since the early 2000s. The buyout category alone has averaged 11% annual growth for two decades, accumulating substantial long-term positive cash flow despite periodic setbacks.
The Global Financial Crisis Pattern
The current growth trajectory mirrors patterns observed after the 2008 global financial crisis. Rapid AUM growth preceding the crisis was followed by an exit slowdown, producing negative distribution-to-contribution ratios that caused AUM growth to decelerate for eight years before accelerating again as fundraising exploded.
Today's market exhibits similar dynamics. Strong AUM growth through 2021 was followed by exit challenges as interest rates spiked in 2022-2023, creating negative cash flow balances that temporarily slowed AUM expansion. However, unlike previous downturns, the industry has maintained fundamental strength, and recovery unfolded rapidly.
The 2025 Recovery
The 2025 market demonstrated the industry's resilience with a powerful rebound across key metrics. US private equity deal value reached $1.2 trillion across over 9,000 deals—the second-highest year on record, trailing only 2021's pandemic-era peak. This performance included 150 transactions exceeding $1 billion, collectively worth $567.8 billion.
Exit activity rebounded with double-digit year-over-year growth in exit count for the first time in four years. Exit value jumped 90% in 2025, with exits through Q3 alone ($832 billion) approaching all of 2024's total exit value ($887 billion).
This dealmaking and exit resurgence, driven by easing interest rates and greater macroeconomic stability, narrowed the significant gap between buyer and seller expectations that had paralyzed activity in prior years. The recovery signals the industry's capacity for sustained growth even amid challenging fundraising conditions.
Current Market Size and Projections
Global Market Valuation
The global private equity market demonstrates impressive scale and growth projections. Global private equity AUM reached nearly $10.5 trillion as of August 2025, representing massive capital deployed across strategies worldwide. Global assets under management across all investment vehicles reached a record $147 trillion in June 2025, underscoring the scale and resilience of private capital markets broadly.
Market analysts project the industry will expand from approximately $593 billion in 2025 to $1.35 trillion by 2034, representing a compound annual growth rate of 9.58%. North America leads the market with the largest share, while Asia Pacific is expected to witness the fastest growth during the forecast period.
US Market Dominance
The United States remains the epicenter of private equity activity, with firms managing over $3.1 trillion in assets. The 2025 deal performance—$1.2 trillion across 9,000+ transactions—demonstrates the market's depth and resilience.
Between 2022 and 2023, thirty-seven US private equity and venture capital firms saw AUM more than double, with median AUM growth of 8%. However, academics warn that extremely fast AUM growth can compromise performance. Research consistently shows that very rapid AUM expansion correlates with reduced returns, often due to insufficient talent acquisition or strategy drift into unfamiliar sectors.
Assets Under Management Evolution
While traditional closed-end commingled funds faced headwinds, this metric fails to capture the full picture. General partners are increasingly accessing alternative capital sources including separately managed accounts, co-investments, and partnerships.
These alternative forms have provided a multitrillion-dollar boost to global private equity AUM beyond traditional measurements. Additionally, GPs are targeting noninstitutional investors such as high-net-worth individuals through multiple channels including aggregators, wealth managers, and accessible fund structures like open-end and semi-open-end vehicles.
Leading Firms by AUM
The largest private equity firms command staggering capital. As of 2025:
| Firm | AUM |
|---|---|
| Blackstone | Surpassed $1 trillion in 2025 |
| Apollo Global Management | $840 billion (Q2 2025) |
| KKR | $686 billion (Q2 2025) |
| Carlyle Group | Just under $500 billion |
| TPG Capital | Just under $300 billion |
| EQT | $281 billion |
| CVC Capital Partners | $180 billion |
| Thoma Bravo | $130 billion (tech-focused) |
These megafunds demonstrate the concentration of capital among top-tier players, though middle market and lower middle market firms also experienced significant growth.
Deal Activity: Remarkable 2025 Recovery
2025 Deal Volume
US private equity activity in 2025 significantly exceeded expectations, delivering the second-strongest year on record. Deal value reached $1.2 trillion across over 9,000 deals, trailing only 2021's $1.46 trillion pandemic-era peak.
The 150 transactions exceeding $1 billion—contributing $567.8 billion in aggregate value—demonstrated continued appetite for large-scale deals among well-capitalized firms. This megadeal activity underscored confidence in the market and deployment of substantial dry powder reserves.
Globally, private equity investment reached $1.5 trillion through Q3 2025, positioning the year to achieve a four-year high with total volumes expected to reach approximately $2 trillion.
Deal Size Trends
The 2025 market showed strength across the deal size spectrum. While megadeals dominated headlines, middle market activity also rebounded as firms deployed capital across size ranges. Large-cap buyout deal value nearly tripled in 2025, while middle market activity showed steady growth. This broad-based recovery across deal sizes reflects healthy market dynamics and suggests sustainable momentum.
Sector-Specific Activity
Different sectors experienced varying growth patterns in 2025:
Technology
The technology segment held the largest market share, driven by artificial intelligence investments and digital transformation opportunities. Private equity firms directed significant capital into AI-powered solutions across healthcare, finance, and logistics, plus companies providing essential AI infrastructure.
Industrials
The industrials sector accounted for substantial deal activity, with hundreds of deals aggregating billions in value. Many industrial deals involved either strategic buyers or carve-out transactions where PE portfolio companies or platforms served as acquirers.
Healthcare
Healthcare demonstrated resilience in 2025, building on 2024's recovery. The sector benefits from demographic tailwinds, innovation in biotechnology and medical devices, and consolidation opportunities across provider networks and ancillary services.
Professional Services
Investments increased significantly, particularly in CPA firms. The trend that began with TowerBrook Capital Partners' investment in EisnerAmper accelerated, with PE firms acquiring stakes in numerous top accounting firms and other professional service businesses.
Financial Services
Financial services saw robust activity as firms capitalized on opportunities in specialty finance, insurance, and wealth management platforms.
Fundraising Dynamics and Challenges
The Fundraising Crisis
While deal activity and exits rebounded sharply in 2025, fundraising tells a starkly different story. Global private equity fundraising totaled just $480.29 billion for 2025—approximately 87% of 2024's total and the weakest levels since 2020. Some analyses indicate a 32.3% decline in PE fundraising over the past 12 months to $440 billion.
Even more concerning, just 41 new funds closed during 2025—the lowest count on record. This represents a dramatic contraction in the number of GPs successfully raising capital.
The fundraising environment became increasingly concentrated, with the top 10 funds capturing 45.7% of all capital raised in 2025, up from 34.5% in 2024. This concentration reflects LP preference for established, brand-name managers with proven track records amid uncertain market conditions.
Distribution Challenges Driving Fundraising Headwinds
The fundamental challenge driving fundraising weakness remains insufficient distributions to limited partners. With the exception of a spike in 2021, capital returned to investors has not kept pace with industry scale.
Global buyout AUM has tripled over the past decade, yet distributions as a percentage of net asset value have fallen from an average of 29% between 2014-2017 to just 11% in recent years. Limited partners need returned capital before committing to new funds, creating a fundraising bottleneck.
Almost one-third of US buyout-backed companies have been held for five-plus years, creating urgent pressure to exit and return LP capital. The 2025 exit surge—with exit value jumping 90% and exit count showing double-digit year-over-year growth for the first time in four years—represents meaningful progress, but the backlog remains substantial.
Dry Powder Dynamics
US private equity dry powder dynamics showed interesting patterns in 2025. One analysis indicated dry powder reached a record $1.1 trillion, while another showed it dropping from $1.3 trillion in December 2024 to $880 billion by September 2025.
This apparent contradiction likely reflects different measurement methodologies and timing. The deployment of aged dry powder into the robust 2025 deal market would explain declining balances in some measurements, while newly raised capital (even at reduced levels) would maintain high absolute dry powder figures. Regardless of precise figures, massive undeployed capital remains available for investment, supporting continued deal activity in 2026 and beyond.
Creative Capital Solutions
To address liquidity demands and fundraising challenges, general partners are innovating with new fund structures and alternative solutions:
Continuation Vehicles
GP-led continuation vehicles have grown fourfold in number over the past five years, with total value increasing almost threefold. These vehicles allow GPs to provide liquidity to existing LPs while retaining ownership of strong-performing assets.
Secondaries Market
The secondary market experienced strong growth in 2025, with secondary funds accumulating capital and total secondaries AUM reaching $601 billion. GP-led secondaries raised $102 billion in 2024 alone. Infrastructure secondaries deal volume was on track to climb by around 50% in 2025.
Retail and Wealth Channel Expansion
GPs increasingly source funds from high-net-worth individuals through aggregators and wealth managers using more accessible vehicles. According to industry estimates, capital from sovereign wealth funds and individual investors will contribute to 60% of future AUM growth by 2033.
Geographic Growth Patterns
North America Leadership
North America maintains the dominant position, with the US representing the single largest market. The 2025 US market performance—$1.2 trillion in deal value—demonstrated unmatched depth and liquidity. Major hubs including New York, San Francisco, Boston, and Chicago host the world's largest firms.
Asia Pacific Mixed Performance
While projected to witness the fastest growth, near-term performance varied. China continued experiencing challenges from geopolitical tensions. India demonstrated remarkable momentum with significant deal activity, including Partners Group's listing of Vishal Mega Mart—the largest capital gain in Indian PE history.
European Market Recovery
Europe experienced modest recovery in 2025, though from a lower base than North America. Public-to-private transaction activity increased, indicating growing appetite for take-private deals. Real estate investment showed double-digit year-on-year gains in 2025.
Emerging Trends Driving Growth
Private Credit Expansion
Private credit continues its remarkable growth trajectory, with AUM expected to nearly double to $4.504 trillion in 2030 from an estimated $2.280 trillion in 2025 according to Preqin projections. This growth is fundamentally reshaping private equity operations and capital structures. Direct lending comprised 90% of middle market LBO lending in recent years, up dramatically from just 36% in 2014.
Major private equity firms are significantly expanding their credit platforms. Blackstone's credit and insurance segment grew to $432.3 billion as of Q3 2025, representing 33% of total AUM. BlackRock's agreement to acquire HPS Investment Partners for approximately $12 billion represents the largest-ever private credit acquisition.
Artificial Intelligence Integration
AI revolutionized private equity across two dimensions in 2025: operational efficiency within firms and investment opportunities in AI-enabled companies. Firms deployed AI for deal sourcing and screening, due diligence automation, portfolio company performance monitoring, and market intelligence gathering. AI-related investments dominated PE allocation strategies, with significant capital directed into AI-powered solutions across healthcare, finance, and logistics.
Infrastructure and Sustainable Investments
Infrastructure remained an attractive asset class delivering steady, long-term cash flows. The most active areas are digital infrastructure (particularly data centers supporting AI), energy and environment (including renewable energy and decarbonization), and transport and logistics. The convergence of decarbonization imperatives and digital infrastructure needs created compelling investment opportunities.
Public-Private Market Convergence
Efforts to target retail investors accelerated in 2025, driving convergence between public and private markets. Wealth management firms created access to alternatives, while alternative asset managers developed products giving individuals access to private markets. This democratization of private equity could represent the industry's next major growth driver, tapping vast pools of retail wealth previously unable to access these investments.
Challenges and Headwinds
Despite strong growth indicators across deal activity and exits, private equity faces meaningful challenges:
Fundraising and Distribution Pressure
With just 41 new funds closing in 2025—the lowest count on record—GPs face intense pressure to deliver distributions before raising successor funds. This creates pressure to exit portfolio companies and increased competition among GPs for limited LP dollars.
Interest Rate Sensitivity
While rates declined from 2023 peaks, they remain elevated compared to the 2010s. Higher borrowing costs reduce leverage multiples in LBOs, compress entry valuations, and create exit challenges.
Valuation Compression
The days of reliably achieving returns through multiple expansion are largely over. The 2025 market required firms to focus on operational value creation, revenue growth, and margin improvement.
Competition Intensity
Record deal value demonstrates abundant capital chasing opportunities. As more capital competes for quality deals, purchase price multiples rise, lowering prospective returns.
Regulatory Scrutiny
Private equity faces increasing regulatory attention globally on transparency requirements, fee structures, portfolio company governance, and environmental/social impact.
What Growth Means for Private Equity Careers
Hiring Market Dynamics
The hiring landscape in 2025-2026 presents paradoxical dynamics. Deal activity hit the second-highest level on record, exits surged 90%, and dry powder remains at record levels—all factors that historically drive hiring. However, the fundraising crisis has slowed hiring despite deal activity strength.
This slowdown has created a significantly stronger experienced candidate talent pool. Professionals who might have been quickly placed in prior years remain available longer, increasing competition for available positions.
For candidates, this means:
- More competition for available positions across all levels
- Higher bar for securing roles, with firms able to be highly selective
- Greater importance of differentiation through technical skills, deal experience, and sector expertise
- Increased value of networking and relationship-building to access opportunities
- Need for patience as hiring processes may move slower
Compensation Strength Amid Market Shifts
Despite hiring headwinds, private equity compensation remains among the strongest in finance. According to Buyside Hub's 2025 Compensation Survey, private equity professionals continue enjoying robust compensation with associates averaging $268,000-$322,000 in total compensation depending on location and fund type.
Mid-level professionals achieve $500,000-$600,000+ in total compensation, while senior professionals with carried interest participation can reach multi-million dollar annual earnings when funds perform well. The competitive talent market has, if anything, strengthened compensation for top performers.
Diverse Entry Points
Industry expansion has created opportunities beyond traditional investment banking pathways. While investment banking remains the primary feeder for on-cycle megafund recruiting, firms increasingly hire from:
- Big Four transaction services and valuation practices
- Corporate development teams at strategic companies
- Management consulting firms (particularly those with transaction or operational focus)
- Industry operational roles for sector-focused funds
- Hedge funds and asset management firms
- Other private equity firms (lateral moves)
Future Outlook: 2026 and Beyond
Industry experts express cautious optimism about private equity's growth trajectory through 2026 and the coming decade, with growth sustainability dependent on resolving the fundraising-distribution mismatch.
Positive Indicators Supporting Continued Growth
Massive Dry Powder
Record dry powder exceeding $1 trillion in the US alone requires deployment, supporting continued deal activity.
Exit Momentum
The 90% surge in exit value represents meaningful progress returning capital to LPs, potentially unlocking future fundraising.
Creative GP Solutions
Continuation vehicles, secondaries, and alternative fund structures are providing liquidity and keeping capital cycling.
Wealth Channel Growth
Expanding access to high-net-worth individuals represents a vast untapped capital source that could offset institutional fundraising weakness.
The Path Forward
The coming years will likely feature continued growth in deal activity and AUM, but resolution of the fundraising crisis remains critical. The industry must work through the backlog of aging portfolio companies, return capital to LPs, and rebuild distribution-to-contribution ratios to healthy levels.
Winners will be distinguished by:
- Operational excellence and genuine value creation rather than financial engineering
- Sector expertise enabling identification of superior opportunities
- Innovative capital solutions addressing LP liquidity needs
- Ability to generate returns in higher-rate environments with compressed multiples
- Scale or specialization advantages—either large diversified platforms or focused niche strategies
Conclusion: Sustained Growth with Evolving Dynamics
Is private equity growing? Yes, unequivocally. The 2025 performance—$1.2 trillion in US deal value (second-highest on record), 90% surge in exits, and nearly $10.5 trillion in global AUM—demonstrates the industry's scale and resilience.
However, growth doesn't mean easy paths to success. The fundraising crisis—just 41 new funds closing in 2025 at the lowest levels since 2020—creates challenges for GPs and competitive hiring markets for candidates. The days of financial engineering driving superior performance have passed, replaced by demands for operational excellence and genuine value creation.
For investors, private equity remains an attractive asset class offering diversification and return potential, with the 2025 exit surge providing encouraging signs that distributions will improve.
For finance professionals, private equity represents a compelling career path with exceptional compensation and intellectually stimulating work. However, the stronger talent pool resulting from hiring slowdowns means securing positions requires thorough preparation, clear differentiation, and patience. Those who develop deep expertise and build authentic industry relationships will find opportunities as hiring accelerates.
Private equity's evolution from a niche alternative investment to a mainstream asset class is complete—the question now is not whether it will grow, but how effectively participants can navigate an increasingly complex and competitive landscape shaped by fundraising challenges, higher rates, and demands for operational excellence.