Private equity enters 2025 with strong expectations amid favorable market conditions. In 2024, PE firms announced US$565b in deals, a 25% increase in value and 20% in volume from the previous year. Confidence is high, with 73% of GPs expecting increased deployment activity. Factors driving this optimism include narrowing valuation gaps, increased asset availability, and improved macro visibility. Exit activity is also expected to rise, driven by secondary buyouts. Additionally, GPs anticipate a surge in IPOs and a continued focus on AI and private markets buildout.

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Key takeaways:

• PE firms enter 2025 with US$1.4t in dry powder; 73% of GPs expect increased deployment activity in the next six months.
• Supply chain issues ranked as a top concern, with 70% of GPs working with portfolio companies to assess these issues in light of proposed tariffs.
• GPs' top expectation for this year is an increase in IPOs, with companies in strong market positions well placed to go public.