In 2024, private markets have generally found a more favorable environment for transactions thanks to the monetary easing initiated by major central banks. The wait-and-see attitude of investors, caused by the sudden return of inflation in 2022 and the shock of rising rates for this industry, is on the verge of being closed. More favorable financing conditions and better visibility on rates have allowed for solid activity in 2024, up 11%1 to $1.585 trillion, signaling a positive trend that is expected to continue in 2025. This renewed optimism is shared by experts at Indosuez, who noted a resurgence of activity in 2024 after two challenging years.

Among the key market indicators, the low level of exits from operations measured by the DPI (Distributed to Paid-In), which is effectively distributed to the investor, had particularly slowed the Private Equity market since 2022, but the trend is now picking up. The second half of 2024 was indeed encouraging; in the United States, the rebound in volume was spectacular even though the trend was partly driven by several large-scale operations in the technology sector. However, the momentum is extending, including to Europe, and the Private Equity industry is now at a turning point.

On the other hand, the environment has remained challenging for fundraising. Capital raised in global private markets is expected to decline by 24%2 to $1.072 trillion. The fundraising period has lengthened, reaching 17 months (median time). These raises have been primarily concentrated around the largest market players.

The level of "Dry Powder" (capital actually available to managers for investment) is down for the first time in 15 years by -15%2, reflecting the industry's difficulties in raising funds. However, the pool of companies seeking investors remains significant.

A modest but growing secondary market

Regarding valuation multiples, they have been adjusted downward since 2022 with the rise in financing costs, but prices are stabilizing. However, there is a real gap between the United States and Europe. While the average EV/EBITDA entry multiples for buyouts in Europe and the United States followed the same trends last year as in 2023, around 9.8 in Europe and 10.9 in the United States³, a persistent difference is observed between the two continents and is expected to continue this year.

The expected increase in valuations is also taking shape in the secondary market, where discounts on buyout funds rebounded in the first half of 2024, reaching 13% versus 16%³ compared to 2022, and has experienced a compound annual growth rate of 16%³ since 2013! Still small in size, this market is expected to continue growing in the long term.

While the evolution of valuations in the private market is less subject to economic fluctuations than in the public market, the main driver of value creation in the private industry remains the ability of industry players to support the development and operational transformation of companies.

Private markets at the heart of investment strategies

Sector-wise, the healthcare, technology, and business services sectors will continue to represent the majority of transactions, while artificial intelligence (AI) is generating unprecedented enthusiasm. The impact of AI on businesses and society is just beginning, and AI will continue to offer opportunities to investors in private markets, particularly in adjacent sectors like data centers and infrastructure.

In 2025, private markets are well-positioned to continue gaining ground in global asset allocations as investors seek diversification and performance. A growing share of the economy tends to elude the public markets as some companies choose to delist or delay their initial public offerings. However, private markets cover increasingly larger segments of the real economy and tend to offer better average performance over the long term. This ability to create value, coupled with lower volatility compared to public markets, argues for the increasing integration of Private Equity into portfolios.

The crisis of 2022 heightened the appeal of private markets to investors and demonstrated the necessary complementarity between asset classes. Private markets are now at the core of investment strategies, as already practiced in the United States. This trend is set to strengthen in Europe and could allow this asset class to represent between 15% and 25% of global allocations.

^{1. Source: Pitchbook Global Annual Private Equity First look 2024 report
2. Source: Preqin database (january 2025)
3. Source: Pitchbook LCD Pitchbook leveraged finance quarterly trends Q3 2024}