2025 Pegged to be a Pivotal Year for U.S. Private Equity

New data from PitchBook highlights the evolving landscape of the U.S. private equity market, offering insights into both opportunities and challenges that lie ahead. Evan Berta, an Associate at Hunt Scanlon Ventures, takes a deep dive into the big implications for talent as the year unfolds.

The newly released “2025 U.S. Private Equity Outlook” report from PitchBook paints a complex picture of the industry as the new year opens up. While some segments show robust growth, others face significant headwinds.

According to the report, private debt funds are expected to reach a decade-high 33% share of cumulative capital raised by the top 10 managers, indicating ongoing consolidation in the market. Meanwhile, PE-backed initial public offerings (IPOs) are predicted to account for 40% of all IPO capital raised in the U.S., reflecting investor confidence in the stability and profitability of these firms.

However, challenges loom. The report anticipates a decline in annual PE fundraising, marking the first significant drop in five years. This is attributed to extended fund closure timelines, reduced dry powder levels, and a slower pace of new commitments. Additionally, a growing number of funds are approaching their maturity walls, with more than half of all active PE funds globally reaching at least six years of age.

Tim Clarke, Lead Analyst at PitchBook, noted that the U.S. private equity market is facing significant challenges but also offers opportunities, particularly in IPOs and private debt.

Private Debt Consolidation

“The share of cumulative capital raised for private debt funds will hit a decade high of 33% for the top 10 managers,” the report states. This growth is driven by the appeal of recurring fees and the relative stability of private debt as an asset class. Over the past decade, private debt assets under management have quadrupled, growing at a historic annual rate of 14.4% compared to 11.9% for traditional PE.

“The rise of private debt will likely increase demand for specialized talent in this space. Firms will need professionals adept at managing complex acquisitions, integrating teams post-merger, and developing innovative debt products to maintain their competitive edge. It is a big lift for talent in 2025.”

PitchBook highlights the ongoing consolidation in the sector, exemplified by high-profile acquisitions such as BlackRock’s $12 billion purchase of HPS and TPG’s acquisition of Angelo Gordon. These moves have reshaped the competitive landscape, with the top managers increasingly dominating capital flows.

Talent Implications

According to Evan Berta, an Associate at Hunt Scanlon Ventures, “the rise of private debt will likely increase demand for specialized talent in this space. Firms will need professionals adept at managing complex acquisitions, integrating teams post-merger, and developing innovative debt products to maintain their competitive edge. It is a big lift for talent in 2025,” he noted.

PE-Backed IPOs Gain Momentum

PE-backed IPOs are set to capture a larger share of U.S. IPO capital, increasing from a decade average of 30.6% to 40% in 2025.

“Part of the gains achieved by PE-backed companies stems from their focus on a balance of growth and profitability ,” the report explains. Unlike their VC-backed counterparts, PE-backed firms often boast stable cash flows, predictable returns, and proven business models, making them attractive to investors seeking stability amidst macroeconomic volatility.

“As more PE-backed companies go public, talent strategies will need to pivot toward managing public market expectations. This includes hiring seasoned leadership teams with IPO experience, strengthening investor relations, and ensuring internal teams are equipped to meet regulatory and market demands. The implications for talent are enormous.”

Recent data supports this narrative. PE-backed IPOs in 2024 delivered a median return of 20.7% to investors, compared to a median loss of 6.8% for VC-backed IPOs. “PE-backed companies are well-positioned to take advantage of favorable market conditions,” PitchBook notes.

Talent Implications

“As more PE-backed companies go public, talent strategies will need to pivot toward managing public market expectations,” said Mr. Berta. “This includes hiring seasoned leadership teams with IPO experience, strengthening investor relations, and ensuring internal teams are equipped to meet regulatory and market demands. The implications for talent are enormous.”

Maturity Walls and Aging Funds

A growing challenge for PE managers is the so-called “maturity wall.” More than 50% of active PE funds globally are at least six years old, and 1,607 funds are due to be wound down in the next two years.

“Many are predicting that private equity is entering a golden age. That said, PE must double down on talent strategy and execution like never before. For PE talent leaders and operating partners, human capital will be the key driver for value creation and growth in what could shape up to be a pivotal year for private equity.”

“GPs will increasingly come up against a maturity wall to wind down funds within their allotted time frames.” the report warns. Continuation funds have emerged as a strategy to address this issue, offering GPs additional runway to maximize value from their best-performing assets. However, the trend underscores broader liquidity challenges facing the industry.

Talent Implications

“As funds approach maturity, firms will need skilled talent in portfolio management, valuation, and strategic exits,” said Mr. Berta. “Additionally, continuation funds will require experienced professionals who can navigate extended fund cycles and maintain stakeholder confidence. For talent, it is game on in 2025!”

Fundraising Decline Expected

Following several years of strong activity, 2025 is expected to bring a downturn in PE fundraising.

“We believe PE fundraising will finally give way in 2025, leading to the first significant decline in five years,” PitchBook reports. Factors driving this include elongated fund closure timelines, fewer megafunds reaching targets, and a decrease in dry powder as deal activity outpaces new capital commitments. For example, the top 10 open funds at year-end 2024 had raised only 36.2% of their combined $129.6 billion target, compared to 73.2% at the same point in 2023.

Talent Implications

According to Mr. Berta at Hunt Scanlon, with fundraising slowing, firms may prioritize roles focused on investor relations and innovative fundraising strategies. “Professionals skilled in building relationships with limited partners (LPs) and identifying alternative capital sources will be critical to sustaining operations. We believe top-leveling talent in this area will be crucial as the year unfolds,” he noted.

What Lies Ahead

Despite these challenges, the PE market remains a vital component of the U.S. economy, with opportunities for growth in areas like private debt and IPO markets. However, fund managers must navigate the dual pressures of maturing funds and declining fundraising to maintain momentum.

Talent Implications

“Many are predicting that private equity is entering a golden age – and our market intelligence points to that conclusion,” said Mr. Berta. “That said, PE must double down on talent strategy and execution like never before. For PE talent leaders and operating partners, human capital will be the key driver for value creation and growth in what could shape up to be a pivotal year for private equity.”