Exit activity will pick up as financing conditions ease and dealmakers turn increasingly bullish in 2025, private equity provider Moonfare predicts, with company’s analysts having identified ten key trends to look out for next year.
A more stable and likely declining interest rate environment should make it easier for dealmakers to price risk, thereby opening up exit opportunities for corporates and sponsors previously hampered by stubbornly wide bid-ask spreads between buyers and sellers, according to Moonfare. IPO activity is also expected to increase.
“The average holding period eased off this year after a spike in 2023. We expect a number of push and pull factors to boost exits and dealmaking in 2025,” said Moonfare’s founder co-CEO Steffen Pauls. “Although private equity activity remains below the 2021 peak, recovery is now clearly gathering pace.”
Meanwhile, if public markets continue their upward trajectory and inflation remains under control, it seems likely private market funds will mark up asset values in their portfolios in 2025 to reflect more benign economic conditions and a smoother growth path for portfolio companies. This has already started happening in high-growth areas such as AI-related businesses, cybersecurity, and green energy.
Moonfare’s ten private equity trends for 2025 are: an increase in exit activity as financing conditions ease; dealmakers turning; demand for semi-liquids to continue to increase; private equity valuations to rise to reflect more benign economic conditions; private credit opportunities to move towards more bespoke financing; secondaries to continue to expand as tools for managing liquidity and portfolios; venture capital to continue to prioritise profitability; technology and climate-led transformation to power industrials and business services deals; macro issues to continue to pre-occupy private equity firms; and focussing on operational change will remain the key to success.
