PE investment in the US was very strong in 2025, accounting for $1.1 trillion dollars — the second highest level of PE investment ever — and close to 2021’s peak high of $1.3 trillion. While the level of investment was robust, the number of PE deals dropped considerably —from 9,054 deals in 2024 to 8,232 deals in 2025.
PE investment in US accounts for half of PE deal value globally
PE investors in US very selective with their dealmaking in 2025
The strong increase in PE funding amidst a drop in deal volume highlights the selectivity PE investors in the US showed with their dealmaking in 2025. Sponsors concentrated on making a smaller number of larger, more strategic deals — right at the top end of the market. Investment committees maintained strong financial discipline, increasingly focusing on issues like debt margin resilience and asking questions around pricing power given macroeconomic factors like inflation. Investor selectivity will likely continue into 2026, with capital continuing to flow into higher conviction opportunities with strong margin resilience and exit visibility.
Value growth over volume growth helped by record dry powder, and private capital
A combination of pent-up demand and a record level of dry powder helped drive PE investment in the US during 2025. Private credit also continued to scale during the year, giving sponsors the financial leverage needed to complete more complex transactions. These factors, combined with an improving financing environment and syndicated markets opening, helped spur higher value deals.
PE fundraising remains soft, concentrated on larger funds
PE fundraising activity in the US was very weak in 2025; while funds raised fell to a five-year low of $278 billion, the number of funds plummeted more than 50 percent year-over-year — to a level not seen in over a decade. The funds that were raised likely reflected LPs consolidating their relationships and prioritizing their investments into bigger funds with multi-strategy offerings given their more consistent performance, co-investing opportunities, and institutional infrastructure. Many larger funds have increasingly diversified — effectively becoming asset management funds offering a combination of buy-up growth, credit, real assets, and infrastructure. This diversification allows LPs to access a broader range of asset classes through a single investment relationship.
Trends to watch for in Q1’26
Heading into 2026, it’s clear that the momentum in the PE market is real. High quality deals will continue at a healthy pace. There will likely be an increasing number of megadeals — particularly in sectors like infrastructure and energy given the significant focus on AI enablement and the energy transition. Tech enabled services and healthcare will likely also be strong as PE firms target value creation. Growing deal sizes and increasing competition at the top end of the market will likely lead to more club deals — deals where private equity firms come together to undertake a large acquisition.
Fundraising activity is expected to remain subdued and focused on the higher end of the market until DPI improves and LPs regain allocation flexibility. Should the concentration on the top end of the market continue to dominate the capital being deployed, there could be an impact on smaller funds over the long-term — with emerging fund managers struggling to raise funds and smaller funds increasingly unable to raise follow-on vehicles — creating more ‘zombie’ funds.
Pulse of Private Equity Q4’25
A KPMG quarterly analysis of global private equity activity.
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