Q2’25 Pulse of Private Equity

The Americas saw PE investment slide from $319.8 billion to $213.9 billion between Q1’25 and Q2’25, while the number of deals fell from 2,260 to 1,771 — 6-quarter and 20-quarter lows, respectively — as PE investors became more cautious in the face of a surge in geopolitical and trade uncertainties. Despite these declines, the Americas continued to account for the largest share of PE activity globally — attracting 59 percent of all PE investment and 47 percent of all deals during the quarter.

US dominates PE investment in the Americas

The US accounted for the largest share of PE investment in the Americas during Q2’25, with $201.97 billion in proposed PE deployment across 1,608 deals. While a decline compared to the $264.5 billion seen in Q1’25, the sentiment of PE investors in the US remained relatively strong, with robust book activity, if a slowdown in signed deals, as many wait for the evolving tariff policies to settle so they can incorporate them into deal decision-making.

Canada, meanwhile, saw a particularly steep fall in PE investment, with just $6.05 billion in proposed deal value during Q2’25 — the lowest amount seen since Q3’20.

PE investment outside of US dries up in face of US tariff uncertainty

PE investment in the Americas outside of the US totaled $11.9 billion across 163 deals in Q2’25 — down significantly from the $55.3 billion across 221 deals seen in Q1’25. The downturn reflects the level of uncertainty rising to a new level in the wake of US tariffs. PE activity outside of the US slowed dramatically for much of the quarter, although there was some optimism that trade negotiations were progressing and that there would be regional or bilateral trade agreements in the near future that could help steady the turmoil and uncertainties in the market.

Currently, many PE investors in the region are focused internally — assessing how their portfolios will or may be impacted by changes in trade policy and looking at how best to incorporate how businesses might be affected by tariffs into their due diligence processes.

Sectors protected from trade concerns see most interest in Q2’25

Across the Americas, companies operating in sectors seen to be less at risk of shifting tariff policies saw more interest from PE investors in the first half of the year than companies operating in sectors more exposed to tariffs. In particular, energy and infrastructure saw robust levels of funding in the first six months of the year, with $22 billion and $25.1 billion in PE investment respectively occurring in jurisdictions in the Americas outside of the US. The US also saw robust investment in these areas, with $43.4 billion in PE investment in the energy sector and $31.1 billion in the infrastructure sector. Business services also continued to see interest from PE investors in the Americas, including in areas like accounting.

PE investment in Canada dries up in Q2’25 as investors pull back in face of trade uncertainty

PE investment in Canada saw a very sharp pullback in investment in Q2’25, driven primarily by the increase in uncertainty related to US tariff policies. Deal value for the quarter plummeted from $27.8 billion in Q1’25 to a 19-quarter low of $6.05 billion in Q2’25. Deal volume also saw a steep fall — from 149 deals in Q1’25 to a 20-quarter low of 104 in Q2’25. It is expected that PE activity in Canada will remain quite dry until the uncertainties related to tariffs are stabilized.

Trends to watch for in Q3’25

Heading into Q3’25, the key area to watch in the Americas will be whether tariff uncertainties stabilize. Should trade agreements get finalized or the region sees more certainty as to the level of tariffs being applied on certain goods, PE investment will likely bounce back.

The recent passage of the “Big Beautiful Bill” in the U.S. will bring a range of implications for the private equity sector – largely positive. Private equity was spared from major disruption, as the treatment of carried interest remains unchanged. The bill simplifies compliance with financial regulations — such as easing Dodd-Frank obligations and repealing Section 958(b)(4), which had complicated international tax structures — reducing administrative burdens and costs for portfolio companies with global operations.

Sector-specific provision may open new investment opportunities, particularly in aerospace and defense, where increased funding for next-gen programs may drive M&A activity. Similarly, advancements in AI — especially technologies tied to defense — are expected to benefit from spillover investment.

Across the Americas, domestic-focused businesses are expected to see more interest from PE investors until trade uncertainties stabilize both due to their lower level of exposure to trade risks and as PE investors look to diversity their investments in order to better protect themselves against geopolitical and trade uncertainties in the future.

While PE investment in Latin Americas is expected to remain subdued over the short term until tariff uncertainties play out, in Mexico in particular there is a sense that over the medium and long term, Mexico-based businesses will benefit from shifting trade conditions — which would have a complementary effect on PE investment.

Given the ongoing geopolitical uncertainties and trade negotiations happening across the Americas, the pullback in PE investment this quarter was not unexpected — with the jurisdictions outside of the US seeing the steepest declines. But PE investors in the region aren’t standing still. Many are already examining how their portfolios might be affected by trade policy changes, how tariffs might affect business operations, and how they can better diversify their investments to increase resilience. They’re also prioritizing at domestic-focused businesses — which could spur deals over the next few months even should trade negotiations take longer than hoped.

Jean Pierre Trouillot

Partner, Advisory Leader for Latin America

KPMG in the US