Private Equity Outlook (October 2025)

Private equity and sovereign wealth funds have become increasingly active in technology, media, and consumer sectors, which are fueling the substantial comeback of leveraged buyouts this year. PE valuations are at all-time highs in Q3 2025, amounting to about $595 billion across 5,000+ transactions. Analysts have said this recovery has been primarily due to stabilized interest rates, as well as PE firms being more inclined to spend after a few quiet years.  

Overall, the economy has been steady over the past few months and is expected to be continued for 2025. On September 17, Federal Reserve Chair Jerome Powell cut interest rates and signaled towards another cut or remaining stable at an interest rate of 4%-4.25%. The cut in interest rates has made it cheaper to borrow which has led to firms increasing their activity in new deals. For example, Electronic Arts (EA Sports) is reportedly in the process of being bought out by multiple investors for a record breaking $55 billion – the largest leveraged buyout in history.  

Although it has been a profitable year for PE firms, they have been holding about $1 trillion in unsold assets. This has been primarily due to Trump’s unexpected tariff agenda, as well as geopolitical uncertainty, which has led to firms holding onto assets longer than expected. Trump recently announcement a potential 100% tariff on China to be enforced on November 1, which would most likely extend the current holdings of assets. 

Looking forward, private equity’s outlook will depend on a few important factors: how active the market for selling companies will become, Jerome Powell’s interest rate decisions, and investors willingness to commit money towards new funds. If the economy and interest rates stay relatively stable, Private Equity could potentially continue to surge in the back end of 2025 and into 2026. This, of course, depends on firms maintaining price discipline and avoiding unexpected market shocks.