Private Markets Outlook 2025: GP Perspectives

After a tough couple of years, private equity firms will be hoping that buying and selling opportunities improve. Limited partners (LPs) certainly seem to be optimistic about this. In the 2025 SS&C Intralinks LP Survey, 78 percent of LPs said they expect deal activity to increase in 2025, with 62 percent planning to increase the number of GP relationships. 

Building on this positive sentiment, here are the collective perspectives of GPs who responded to a series of five short questions.

How do you assess the risk environment for 2025?

Marty Sjoquist, managing director, MiddleGround Capital (U.S. lower middle market-focused private equity manager): We are currently focused on trade policy impact on global supply chains, broader interest rates and the regulatory environment as industry-related risks that we’ll be monitoring most closely in 2025. As capital markets and regulations evolve, we’ll be able to determine how they influence our overall investment strategy and any future deals we pursue.

With a primary focus on industrial, manufacturing and distribution sectors across North America and Europe, we continue to navigate an evolving deal making environment. Given a more protectionist set of proposed economic policies and renewed interest in re-shoring and near-shoring, we believe our core U.S. manufacturing and distribution businesses are well-positioned to embrace these policy changes.

Christiaan de Lint, managing partner, Headway Capital Partners (U.K.-based lower middle-market private equity manager): What we hear is that people are busy preparing for more [initial public offerings] IPOs and [mergers and acquisitions] M&A activity in 2025. There is still uncertainty, and things can go wrong, but it feels like it's going to be a better year from an exit perspective. The only predictable thing with President Trump is that he is unpredictable!

Partners Group, (Swiss-based global private equity firm): We believe investors can no longer count on real growth, nor on record low interest rates. The emphasis must be on what we build and on deploying capital behind investments that stand to benefit from long-term secular themes. The rising political polarization is likely to drive regulatory changes and shift fiscal priorities. As such, we closely monitor regulatory developments and are watchful of the reliance on governments’ agendas when considering prospective investments.

Our near-term outlook for 2025 is that the U.S. economy will moderate as household consumption slows. We forecast four to five cuts in 2025 and see the Fed rate at 2.5 percent in five years’ time.

*Comments used with permission from Building Value In a Brave New World

Isaac Tak, portfolio manager, BCK Capital Partners (U.S. special situations manager): It’s tough to have conviction in whether we are going to have a ‘risk on’ environment vs. a ‘risk off’ for a few reasons. On the one hand, we have a new administration in the U.S. that measures its success by the heights of the stock markets. Some of the administration’s stated goals are to reduce red tape, improve the business environment and utilize the country’s resources to drive input costs down, which would favor a risk on environment. However, the administration’s policies de-emphasizing global trade could spur inflation and lead to contraction, provoking a risk off environment.

How do you view the fundraising environment for 2025?

Marty Sjoquist: We anticipate a competitive, robust fundraising environment in 2025. As the private equity (PE) industry continues to provide distributions from prior vintages and institutional investors commit to maintaining or increasing private markets allocations, we anticipate [limited partners] LPs will ramp up their investments across experienced managers. We expect established firms to continue to be primary recipients of new capital, but LPs will be increasingly selective.

Our multi-pronged origination strategy has proved to be resilient despite market conditions, and we’re optimistic that advanced manufacturing, supply chain resilience, and infrastructure will be key trends in 2025, which will experience positive tailwinds and drive long-term growth opportunities for our investors and portfolio companies.

David Whyte, managing director, ADM Capital (Hong Kong-based private credit specialist): Demand and interest in Asia continue to boom from newer pockets focused on our region, such as the Middle East. The expected partnerships will be broad, going beyond just LP allocations to collaboration across jurisdictions from sector leaders. Private debt as an asset class is also set for strong growth domestically in the UAE, and collaboration on private debt’s structuring approach and sourcing mechanisms may also enter the frame.

How do you view the valuation picture for 2025?

Partners Group: The “brave new world” is synonymous with uncertainty and volatility. Therefore, while we are constructive about the near-term recovery in private equity activity and valuations, the longer-term outlook will present challenges. We anticipate navigating an investment landscape characterized by inflation and interest rate volatility, which will lead to fluctuations in valuations and cash flows.

This situation reinforces the need for disciplined underwriting, with a careful approach to leverage as well as a focus on margin resilience. This anticipated volatility also highlights the value of having an investment platform with a diverse offering, as this provides flexibility to deploy across the various private equity segments according to evolving relative value attractiveness. The long-term outlook is also shaped by structural challenges and a growing embrace of technology, a trend we have been anticipating for several years.

*Comments used with permission from Building Value In a Brave New World

Marty Sjoquist: Given that the current industrial economy is using highly outdated technology, we believe advanced manufacturing will present attractive opportunities to modernize company processes and operations in the coming year. Also, we’re continuing to watch automotive and mobility sectors, as the rapid rate of change around electrification and hybridization trends, in particular, are creating opportunities for investors.

In addition to electrification, vehicle lightweighting and advancing autonomous vehicle technology will be areas of focus for us in 2025. In the U.S., we’re particularly excited about the ongoing investment and demand for infrastructure, particularly as funding from previous legislative packages will soon require investment. Coming off a slower year in terms of M&A, we expect 2025 will be a much more robust year for exits, where we continue to demonstrate our ability to create value through operational improvement and EBITDA growth.

European lower mid-market private equity manager: Valuations went high a few years ago, then they went lower. Now lately they've increased again a little bit. There's a feeling that things are a little bit more risky again and if lower interest rates don't materialize, this might put downward pressure on valuations. It’s tough to call. If you introduce tariffs, that will further put pressure on prices. I think a lot of promises in the U.S. were made on the wrong basis. We’ll see what happens.

Where will the biggest opportunities be for value creation in 2025? 

Christiaan de Lint: It’s very specific because we back independent sponsors on a deal-by-deal basis. The independent sponsor model is in a very high growth phase right now here in Europe. Two years ago, people barely knew the model existed. It’s a little bit like secondaries in the ‘90s. Nobody was thinking about selling something on the secondary market because they didn’t know there was a secondary market. Once the ’00 internet/telecom crash happened, they found out. I think we’re going through the same transition now.

David Whyte: The Asian private credit deal landscape is evolving at a rapid pace. Traditional forms of funding from banks and equity markets are increasingly constrained, opening the door to a range of new and different private credit transactions; for example in infrastructure. ADM Capital sees growing opportunities in intra-Asia trade investments that amplify the Asian growth story as geopolitical tensions and tariffs disrupt traditional Asia-to-West trade. Additionally, we see more of a need for funding the decarbonization of Asia as its markets continue to develop.

How do you expect technology innovation to further shape the way GPs communicate with and report to their LPs, over the next 12 months? 

Issac Tak: Technology has made it easier to distribute data, including data that LPs really want, such as more granular views of the portfolio and drivers of performance gains and losses. In addition, technology has made it easier to get in front of the LP audience through various social platforms. While the larger institutions will likely continue to rely on their existing networks for [the] distribution of ideas and investment opportunities, smaller institutions may explore new ways to distribute their ideas and opportunities through open networks [enabled by technology.

David Whyte: Embracing the fast-changing data landscape is essential. At ADM Capital, we work with regional climate data specialists and have launched a centralized [environmental, social and corporate governance] ESG data management platform to both support our borrowers with data inputs, and to continue to provide improved transparency to our LPs. We remain focused on the quality rather than the quantity of our data collection through direct engagement with our borrowers. Education and stewardship on best practices are essential and a focus for our team.

Looking forward

U.S. private markets could respond favorably to a more stable valuation picture if rates fall and the gap between buyers and sellers narrows, leading to increased exit activity. In Europe and Asia, there should be further opportunities for specialist GPs to demonstrate their investment edge as investors consider niche strategies to complement exposure to large, generalist managers. 

GPs’ ability to drive value will lead to further performance dispersion and influence what many expect to be an improved fundraising environment.