Private equity in 2025: H1 trends and H2 outlook

PE deals fluctuated in the first half of 2025, and now leading firms are sharpening their focus on efficiency, AI adoption, and focused deal strategies. Here’s what the data shows—and what we expect for the rest of the year. 

Key takeaways 

• Firms that prioritize operational improvements and sustainable value creation are gaining a clear competitive edge. 

• AI adopters are speeding up due diligence, improving forecasting, and uncovering new growth opportunities. 

• Leveraging continuation vehicles, secondaries, and performance metrics are critical to identifying untapped value creation opportunities. 

Private equity (PE) has long been synonymous with strategic growth and value creation. However, the first half of 2025 reminded us that even this dynamic market segment is not immune to macroeconomic pressures and industry shifts. From early-year optimism surrounding dealmaking to a slowdown triggered by geopolitical uncertainty, tariff changes, and liquidity constraints, the PE sector has displayed resilience under challenging conditions. 

Now in the second half of 2025, firms face a mix of challenges and opportunities. To stay competitive, they must adapt to evolving market demands, shifting strategies, and emerging technologies. Highspring’s Private Equity experts offer a look back at the defining trends from the first half of the year—and share predictions to help firms position themselves for success throughout the remainder of the year. 

H1 2025 recap: Key trends shaping the market 

The PE world has experienced a tale of two halves so far this year. While early 2025 featured strong dealmaking and optimism, the latter part of H1 revealed slowing momentum. Here are some of the notable trends that defined PE in the first half of 2025. 

Dealmaking starts strong but slows in Q2 

• Q1 surge: Global PE activity experienced an impressive start, with $495 billion raised from approximately 4,800 deals. This marked the highest quarterly figure since late 2021, representing nearly 40% year-over-year growth compared to the same quarter in 2024. 

• Q2 cools off: Tariff fears and economic uncertainty slowed deal activity in Q2, leading to a projected 25% decline in deal value against Q1,according to Pitchbook.

• Exit activity: While early-year strategic sales, such as Walgreens and Nova Chemicals, drove an 80% uptick in exits compared to Q1 2024, overall distribution levels remain muted due to the rapid Q2 slowdown. The Wall Street Journal reports that roughly $3.6 trillion to $4 trillion of net asset value remains locked across about 30,000 portfolio companies—with more than half of that held for over four years. 

AI adoption gains momentum 

Artificial intelligence (AI) has quickly evolved from a nice-to-have to an essential tool for PE firms. According to the Harvard Business Review, firms are creating value by applying it to due diligence, cost reduction modeling, and revenue generation processes—and adoption is accelerating. In fact: 

• AI tools are now compressing weeks of document analysis and vendor review into hours. 

• According to Business Insider, PE firms like Carlyle report that over 90% of their internal teams are leveraging AI tools—including ChatGPT, Perplexity, and Copilot—for deal screening and operational improvements. 

Mid-market steadies the sector 

While megadeals often dominate headlines, mid-market activity has become the backbone of PE stability in 2025.  

• Carve-outs in sectors including healthcare, industrial services, and energy transition yielded reliable returns, with U.S. upper-quartile mid-market buyout funds outperforming their large-cap peers by more than 500 basis points annually. 

H2 2025 outlook  

Looking ahead, the second half of the year brings a combination of opportunities and critical decisions. Success will require firms to balance agility with strategic focus. Here’s what the data and early indicators suggest will drive that focus for the remainder of 2025. 

1. Pivots toward organic growth 

The traditional “buy, buy, buy” acquisition strategy is giving way to a more measured focus on organic growth. Now, PE firms are: 

• Prioritizing operational efficiency within existing portfolio companies. 

• Enhancing performance through resource optimization, talent development, and sustainable strategies. 

Highspring’s outlook: PE firms that focus on internal improvements and sustainable value creation are likely to outperform in the current landscape. 

2. Efficiency through technology 

The rapid adoption of AI continues to reshape PE strategies and processes in H2. To stay ahead, PE firms are: 

• Treating AI as core infrastructure: Beyond dealmaking, AI-fueled insights are improving operational efficiency and enabling more accurate forecasting. 

• Adopting selectively by sector: While tech and financial servicese lead adoption, sectors like healthcare remain cautious about integrating AI into investment strategies and decision-making. 

Highspring’s outlook: Early adopters—especially those leveraging generative AI—are already shortening due diligence timelines and surfacing new value levers. Firms that delay AI integrations or deployments are likely to fall behind their more agile competitors. 

3. Creative and nontraditional deal structures 

With $2.5 trillion in global dry powder, PE firms face increased pressure to deploy capital. As a result, expect to see: 

• Continuation vehicles, strip sales, and structured exits becoming essential tools—not just stopgaps. 

• A rising share of secondary market investments, building on 2024’s 40% growth. 

Highspring’s outlook: Agile PE firms will tap into emerging markets and distressed assets to diversify their portfolios and stand out in a competitive environment. 

4. Increased data and analytics demand 

A growing focus on granular performance metrics for finance and operations alike is causing greater data and analytics demand in-house. Although few achieve this highly sought-after milestone, firms leveraging data-backed approaches stand a better chance of unlocking new growth potential. 

Highspring’s outlook: PE firms that integrate data analytics into portfolio management will gain clearer insights, allocate resources more effectively, and identify hidden value opportunities—helping them stay ahead in a competitive market. 

5. Near-shoring drives finance transformation for PE-backed companies 

As geopolitical uncertainty and rising labor costs challenge traditional offshore models, private equity firms are increasingly turning to nearshore managed services to unlock operational efficiencies. The nearshore outsourcing market, now valued at $2.67 billion, is projected to reach $3.99 billion by 2034, driven by demand for regionally aligned delivery models and better time zone compatibility with U.S.-based teams.  

Highspring’s outlook: PE-backed platforms that embed nearshore delivery into their operating models will see faster scalability and stronger EBITDA margin expansion in H2. 

Key strategies for H2 success 

PE firms looking to gain an edge in the second half of 2025 will need to act decisively—balancing discipline with bold, forward-thinking execution. Here’s where you should focus your efforts. 

Invest early in generative AI 

Leverage emerging tools to accelerate decision-making and uncover deeper insights across the deal lifecycle. 

Rethink capital deployment  

Pursue secondaries, strip sales, and mid-market carve-outs to unlock liquidity and boost returns. 

Drive portfolio efficiency 

Improve performance within existing assets to generate organic value and reduce risk. 

Adopt enhanced data and analytics tools 

Use robust FP&A tools such as OneStream to drive improved visibility on financial and operational performance 

Consider near–shore managed services to drive finance transformation 

Unlock operational efficiencies by shifting investment to lower cost managed service providers for transactional finance and accounting work.  

Specialize to outperform 

Diversification is out. PE firms with deep sector expertise are better positioned to outperform generalists in uncertain markets. 

Move your PE strategy forward with a partner you can trust 

Highspring understands what it takes to create value in today’s fast-moving PE landscape.  Whether you’re exploring how to use AI and digital tools, refining your growth strategy, or strengthening limited partner (LP) confidence, we help firms make smarter decisions—faster. Our support is rooted in deep expertise, actionable insight, and a clear focus on outcomes. 

Ready to move your strategy forward with confidence? Connect with Highspring’s PE experts today to get started.