McKinsey's latest private equity report characterizes the asset class as at an inflection point. While headline fundraising fell 24 percent last year, the firm sees liquidity, market environment, and limited-partner sentiment all swinging back in favor of sponsors through the rest of 2025.

Despite the drop in fund commitments, a McKinsey survey found that “30 percent of respondents said they plan to increase their private equity allocations in the next 12 months.”

Some areas are already emerging as bright spots. Middle market strategies (defined as fund sizes of $1-5 billion) held flat year-on-year, while fresh capital from separately managed accounts, co-investments and continuation vehicles offset traditional fundraising shortfalls with what McKinsey labeled “a multitrillion-dollar boost” to reported assets under management.

One of the report’s more notable takeaways is the cash flow dynamics for private capital investors. Distributions finally ticked up in 2024, and, coupled with the lackluster fundraising, pushed cash flows net positive for LPs. “For the first time since 2015, sponsors' distributions to LPs exceeded capital contributions (and were the third highest on record).”

Large transactions helped drive the rebound as deals above $500 million rose 37 percent by value and 3 percent by count.

New investments also saw some momentum. Median entry multiples recovered from a cooler 2023 to hit 11.9x LTM EBITDA, the second-highest level on record.

Public-to-private transactions gained popularity, accounting for 11 percent of global deal value in 2024, up from 9 percent the prior year. Within Europe, take-privates jumped nearly 65 percent from 2024.

McKinsey attributes the shift to sponsors choosing “undervalued companies” over secondary buyouts and flagging the growing presence of U.S. capital in European markets (echoing commentary earlier this month from KKR's Henry Kravis on his view of the current opportunity set).

Looking at value creation, StepStone data cited in the report show leverage and multiple expansion accounted for 61 percent of buyout returns between 2010-2022. With those levers now fatigued, firms are turning to portfolio operations groups to fill the gap; McKinsey found the average team size of such functions has “more than doubled in the past three years.”

Looking forward, the report lists the year's remaining potential catalysts: three U.S. rate-cut decisions penciled between June and December; EU elections that could reshape tariff policy; and year-end fundraising closes that will test whether 2024’s uptick in optimism can translate into hard commitments.

• Hologic (Nasdaq: HOLX) rejected an unsolicited $16 billion buyout offer from Blackstone and TPG, per the Financial Times.

• Salesforce (NYSE: CRM) agreed to acquire Informatica (NYSE: INFA), a data management software firm, for approximately $8 billion in cash.

• Bridgepoint entered into exclusive talks to acquire Finzzle Groupe, a French wealth management consultancy.

• Acrisure, a Michigan-based insurer that recently raised $2.1 billion from Bain Capital, agreed to acquire the payroll business of Global Payments (NYSE: GPN) for $1.1 billion.

• MBK Partners agreed to acquire Makino Milling Machine for around $1.75 billion.

• H.I.G. Capital agreed to acquire the French workwear business of Rentokil Initial (LSE: RTO) for $464 million.

• Ascent Equity Partners and Shinsegae Group are working together on a $208 million takeover bid for listed South Korean cosmetics manufacturer C&C International.

• Cantor Fitzgerald agreed to acquire hedge fund manager O'Connor from UBS.

• Cerberus has expressed interest in purchasing the lease for Australia's Port of Darwin from China's Landbridge Group, per Bloomberg.

• KKR and Nippon Sangyo Suishin Kiko have each submitted takeover offers for Japanese chemical manufacturer Taiyo Holdings, per Bloomberg.

• Movendo Capital and Draycott acquired Versescence, a French perfume bottle manufacturer, from Stirling Square Capital Partners.

• Breakwater Management acquired a majority stake in Chemistry, an Atlanta-based marketing agency.

• Hensoldt, a German defense technology company, is exploring the sale of its South African optronics business, per Reuters.

• Littlejohn & Co. agreed to acquire RailPros, an Irving, Texas-based railroad engineering firm, from Court Square Capital Partners, per PE Hub.

• BetaNXT, a wealth-tech firm owned by Clearlake Capital Group and Motive Partners, acquired Delta Data, a Columbus, Georgia-based provider of investment fund solutions.

• Alongside, a portfolio company of Fletch Equity and NewSpring, acquired San Diego ABA, a provider of autism services.

• Aventia, a Bernhard Capital-backed environmental consultancy, acquired Habitat Management, a Colorado-based natural resource management and ecological consulting firm.

Tech, Vertical SaaS, & Misc. Enterprise

• Neuralink, Elon Musk’s brain implant startup, raised $600 million in new funding at a $9 billion pre-money valuation, per Semafor.

• Hex, a San Francisco-based workspace for data science and analytics, raised $70 million in Series C funding led by Avra, with participation from Sequoia Capital, Andreessen Horowitz, Amplify, Box Group, Redpoint Ventures, and Snowflake Ventures.

• CloudZero, a cloud cost optimization platform, raised $56 million in Series C funding co-led by BlueCrest Capital Management and Innovius Capital, with participation from Matrix Partners, Threshold Ventures, Underscore VC, G20 Ventures, and MongoDB.

• Cerby, a security platform for unmanaged applications, raised $40 million in Series B funding led by DTCP, with participation from Okta Ventures, Salesforce Ventures, and Two Sigma Ventures.

• Superblocks, a secure enterprise app development platform, raised $23 million in Series A extension funding from Kleiner Perkins, Spark Capital, Greenoaks Capital, and Meritech Capital.

• Infinity Constellation, a holding company that builds and scales startups across fintech, enterprise SaaS, and advisory services, raised $17 million in Series A funding led by Freestyle, with participation from Backed VC, Deepwater, and BY Venture Partners.

• Traceloop, an LLM monitoring platform, raised $6.1 million in seed funding co-led by Sorenson Capital and Ibex Investors, with participation from Y-Combinator, Samsung NEXT, and Grand Ventures.

• Unibeam, an Israeli startup developing SIM-based authentication technology to combat fraud, raised $6 million in seed funding led by NFX.

• Frinks AI, a company developing Vision AI systems for manufacturing quality control, raised $5.4 million in pre-Series A funding led by Prime Venture Partners, with participation from Chiratae Ventures, Navam Capital, and Zen Technologies.

• Spott, an AI-native recruitment platform for staffing agencies, raised $3.2 million in seed funding led by Base10 Partners, with participation from Y Combinator, Fortino Capital, and True Equity.

Fintech

• Palla, a cross-border payments platform for instant transfers between financial institutions, raised $14.5 million in Series A funding led by Revolution Ventures, with participation from Y Combinator, Cowboy Ventures, Ardent, Dash Fund, Uncommon Capital, Meta Fund, Evolution VC, First Check Ventures, Vitalize, and DeepWork Capital.

• Gail, a Miami-based AI platform for financial services, raised $8.2 million in seed funding co-led by HTwenty and Act One Ventures, with participation from Mangusta Capital, NextView Ventures, and A15.

Consumer & Media

• Amplitude Studios, a Paris-based strategy game developer behind the ENDLESS universe, raised €12 million in Series A funding led by Griffin Gaming Partners, with participation from Bpifrance.

• Ad Signal, a York-based media intelligence platform, raised £3 million in growth funding from Foresight Group to accelerate product development and expand its commercial footprint across the UK and internationally.

Healthcare

• GRIN Therapeutics, a developer of precision therapies for neurodevelopmental disorders, raised $140 million in Series D funding from Angelini Pharma and Blackstone Life Sciences.

• GlycoEra AG, a developer of extracellular protein degraders for autoimmune diseases, raised $130 million in Series B funding led by Novo Holdings, with participation from Catalio Capital Management, LifeArc Ventures, QIA, Sofinnova Partners, 5AM Ventures, Roche Ventures, Bristol Myers Squibb, Agent Capital, MP Healthcare Venture Management, and Sixty Degree Capital.

• Salvia BioElectronics, a clinical-stage medical device company developing neuromodulation therapy for chronic migraine, raised $60 million in Series B funding led by Innovation Industries, with participation from Invest-NL, EIC Fund, Inkef, Panakès Partners, SHS Capital, Dolby Family Ventures, Brabant Development Agency, and Thuja Capital.

• Hedera Dx, a Swiss company developing blood-based cancer tests for hospital labs, raised €15 million in Series A funding led by Vsquared Ventures, with participation from Tesi, Helsana HealthInvest, Eyrir Venture Management, Inventure, and Top Harvest.

• Surgify Medical, a Finnish company creating bone-cutting technology that protects soft tissue in head, neck, and spine surgeries, raised €7 million in Series A funding led by ZEISS Ventures, with participation from European Innovation Council Fund, Lednil, and Cascara Ventures.

• Hormona, a London-based women's health startup for hormone tracking and optimization, raised $6.7 million in seed funding co-led by Voima Ventures and SuperNode Global, with participation from DLF Ventures, Nascent Invest, and Techstars.

• Brainreader, a Danish company that develops software for volumetric brain MRI analysis, raised €6.6 million ($7.3 million) in Series A funding led by Dahlgren Capital, with participation from Investo Capital.

• Kyron.bio, a Paris-based biotech developing glycan-engineering technology for antibody therapeutics, raised €5.5 million in seed funding led by HCVC, with participation from Verve Ventures, Entrepreneurs First, and Saras Capital.

• Alba Health, a Swedish-Danish startup offering microbiome testing and personalized nutrition for children aged 0-12, raised $2.5 million in seed funding led by Unconventional Ventures, with participation from Exceptional Ventures, Voima Ventures, Noaber, and Bust.

Industrials, Greentech, & Other

• Volare, a Finnish biotech that converts food industry byproducts into insect-based protein, raised €26 million in new funding from Maki.vc, Firstminute Capital, Springvest, The Finnish Climate Fund, Finnvera, and Norion Bank.

• Applied Computing, a UK-based industrial AI software developing efficiency solutions for oil, gas and petrochemical industries, raised £9 million in seed funding led by Stride.VC, with participation from Repeat.vc.

• Cathay Innovation raised $1 billion for its third fund focused on AI investments.

• Zeal Capital Partners, a Washington, D.C.-based venture firm, raised $82 million for its second fund.

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