The global consultancy takes a look at the dynamics shaping global private equity, and notes how investors have had to wait longer than they'd expected to reach the exit stage, and how unused "dry powder" has increased. The report chimes with concerns that the wealth management industry has heard for some time.

Private equity dealmaking returned “in force” globally in 2025, with $500 million-plus deals in buyout and growth categories rising 44 per cent to stand at more than $1 trillion, a report from McKinsey & Co says.

The value of PE-backed exits globally also rose more than 40 per cent, helped by a near doubling of exits that happened via initial public offerings on stock markets. There was also a return of “megadeals” – those higher than $2.5 billion. Last year, for example, the take-private of Electronic Arts by a syndicate of firms was a record at $55 billion.

The report comes at a time when this publication continues to hear of wealth sector impatience about delays to exits and returns on invested capital. The private markets sector (equity, credit, real estate, infrastructure and others) has suffered from indigestion, prompted to some extent by the post-pandemic spike in global interest rates. This partly explains why large private market shops such as Blackstone, to give one example, have moved into the private wealth space as a new way of distributing funds, and have used “evergreen” fund structures as part of this. There has also been the rise of “secondaries” as sources of liquidity and more efficient price discovery, and "continuation" vehicles. FWR heard about some of these issues from family office figures at its investment summit in New York City last fall.

“After three years of dampened dealmaking, we observed early in 2025 that the global private equity (PE) industry was `emerging from the fog.' Now, the fog has finally burned off. Dealmaking returned in 2025 in force: Buyouts surged, exits rebounded, and initial public offerings (IPOs) reemerged,” the report, entitled Global Private Markets Report 2026 (February 10, 2026), said. The authors are Alexander Edlich, Chris Llewellyn, Christopher Croke, Rahel Schneider, and Warren Teichner from McKinsey’s Private Capital Practice.

The authors observed that the median private equity purchase multiple increased from 11.3 times earnings before interest, taxation, depreciation and amortization in 2024 to 11.8 times EBITDA in 2025. When compared with public markets, PE returns “remain subdued,” it said.

Another challenge is that the backlog of PE-owned companies still on the books has “never been bigger.”

“We estimate that more than 16,000 companies globally have been held for more than four years, equivalent to 52 per cent of total buyout-backed inventory as of 2025 – the highest on record, and 10 percentage points higher than the past five-year average. Holding periods also remain well above historical levels. The typical company in the portfolio of a general partner (GP) is now held on average for more than six and a half years,” the authors said. 

Such comments can lead to concerns that the rise in private market investing – part of a secular shift that has seen a move from the public listed side since the late 1990s – might have peaked, although that argument is countered by wealth managers who have spoken to Family Wealth Report in recent weeks (see examples here and here). 

A related point in the McKinsey report is that “liquidity for investors remains more a trickle than a flood.”

“Trends that first appeared to be `niche’ or temporary solutions after the dealmaking exuberance of 2020 and 2021, including the growth in secondaries, the rise of continuation vehicles, and the emergence of net asset value (NAV) lending, now appear to be enduring – even growing – elements of this more technically demanding private equity terrain,” the report said. 

It’s challenging out there
“What’s more, even while dealmaking value rose globally, capital deployment remains challenging,” the report said. For example, it noted that the count of buyouts of all sizes fell 5 per cent – and applied to all global regions. North America slowed the most, with buyout count falling 7 per cent; European buyout counts declined 4 per cent, while Asia–Pacific declined 3 per cent. 

The dry powder – committed but unspent capital – available to PE sponsors is getting “even drier.” â€śWe estimate that more than 40 per cent of the dry powder ready for deployment by GPs today has been available for the past two years (15 percentage points higher than the five-year average),” it said.

And modest returns remain, and these contrast with public markets benefiting from the AI bonanza, it said. 

“In 2025, top-quartile global buyout returns averaged 8 per cent (measured on a pooled internal-rate-of-return [IRR] basis), less than half of the returns generated by companies in the S&P 500 (18 per cent) and MSCI World (22 per cent) indexes. Older buyout vintages are a major driver of this dynamic: The 2015 to 2017 vintages are generating roughly 2 per cent IRRs, pulling average buyout return from 2015 to 2025 to about 6 per cent despite newer vintages showing – largely unrealized – 15 per cent IRR,” it said. 

The report concluded by noting that because private equity has matured, obtaining fruitful returns is becoming more difficult, but the asset class has an established place in portfolios.  

“The road ahead, while steeper and more demanding, remains very much open. Especially for the right vehicles,” it added.

(In September last year, McKinsey & Co issued a report on the state of the world's asset management industry.)