Private equity entered 2025 with strong momentum from the previous year, supported by open credit markets and falling interest rates. The first quarter recorded robust deal values, buoyed by major buyouts such as Sycamore Partners’ $23.7 billion acquisition of Walgreens Boots Alliance and strategic exits like GTCR’s sale of Worldpay. However, the optimism quickly faded as tariff-related uncertainty intensified from April onwards. The announcement of new trade policies led to market volatility, slowing both deal announcements and exits. IPO activity was among the most visibly impacted areas, with firms like Klarna reportedly pausing plans to go public. The slowdown stems from renewed uncertainty disrupting long-term planning, just as investors were regaining confidence after years of shocks like COVID-19, war, inflation, and rate hikes.
The downturn in deal activity has deepened liquidity challenges across the sector. Limited partners (LPs) are facing delayed distributions, prompting some, including Yale University and China Investment Corporation, to turn to secondary markets for liquidity. “LPs can’t realize returns, access cash, or rebalance their portfolios,” the report stated, citing concerns about limited exit opportunities. While secondaries offer some relief, they account for less than 5% of assets under management. Despite ongoing pressure, private equity firms continue to seek opportunities. As the report concluded, “Tomorrow’s winners will be quick to grasp exit opportunities. They will also anticipate what might come to market—and form a clear view of what they want to own. With no end to today’s turbulence in sight, leaning into it is likely the best option.”
