.png)
In a year marked by optimism and caution, private equity firms are facing a rapidly evolving environment. According to the 2025 Global Private Equity Outlook survey by Dechert and Merger market, a significant majority of private equity professionals are bracing for heightened regulatory scrutiny over the next 12 months. This shift in the regulatory landscape could have profound implications for dealmaking, particularly in light of global political tensions, economic challenges, and the ongoing evolution of antitrust and foreign direct investment (FDI) policies.
Geopolitical Tensions: A Cloud on the Horizon
The geopolitical environment is another concern for private equity firms. According to the survey, 46% of respondents believe that geopolitical conflict will weigh on deal activity over the next year. From the ongoing U.S.-China tensions to the uncertain political climate in Europe and the Middle East, the instability in global relations has the potential to disrupt cross-border transactions.
For private equity firms, which often look to international markets for expansion and diversification, these geopolitical risks cannot be ignored. Dealmakers will need to account for potential trade barriers, shifting alliances, and regulatory changes as they assess the viability of deals, particularly those that cross borders. While the global private equity market remains active, these risks will likely prompt a more cautious approach in the near term.
Economic Growth and Deal Activity: A Balancing Act
A more immediate concern for many in the industry is weak economic growth. Over a quarter (27%) of survey respondents expressed concern that sluggish global economic conditions would dampen dealmaking activity over the next 12 to 18 months.
Slower economic growth can lead to tighter credit conditions and lower valuations, making deals less attractive or harder to finance. In addition, firms may face more resistance from sellers who are holding on to assets in anticipation of better economic conditions.
Opportunities Amidst the Challenges
Despite these headwinds, the private equity industry remains resilient, with several promising opportunities on the horizon. One of the most notable trends is the continued interest in take-private deals, with 93% of respondents indicating that they are at least somewhat likely to pursue such transactions over the next year. Take-private deals, which involve taking publicly traded companies off the stock market, can be particularly appealing in times of economic uncertainty when public market valuations may not reflect a company's true value.
Similarly, secondaries activity—the buying and selling of stakes in private equity funds—is expected to remain strong, with 82% of respondents predicting either stability or growth in this area over the next two years. This trend reflects the increasing liquidity in the private equity market, as investors seek to rebalance their portfolios or access capital from other sources.
Another area of focus is GP-stake divestitures, with 34% of respondents planning to explore these transactions in the next two years. These deals, which involve the sale of stakes in private equity firms themselves, are becoming more common as firms look for ways to unlock value and strategically position themselves for future growth.
A Mixed Outlook, but a Path Forward
While the global private equity landscape faces considerable challenges in the form of regulatory scrutiny, geopolitical tensions, and economic uncertainty, there are also clear opportunities on the horizon. As public markets improve and borrowing costs ease, private equity professionals expect more exit opportunities, providing a potential boost to deal activity in the coming months.
As the industry adapts to this rapidly changing environment, the ability to navigate regulatory complexities, manage geopolitical risks, and identify opportunities in a more subdued economic climate will be crucial. While the next 12 to 18 months may not be as dynamic as 2023, there remains significant potential for growth, provided that firms can stay agile and responsive to the shifting tides of global markets.
For legal experts working within the private equity space, the evolving regulatory landscape is a critical area of focus. Antitrust, FDI, and geopolitical concerns will undoubtedly shape the structuring and execution of future deals. As dealmakers prepare for a more scrutinized environment, legal professionals will play a pivotal role in ensuring compliance, mitigating risks, and guiding firms through the complexities of this dynamic market.
Follow LexTalk World for more news and updates from International Legal Industry.
Commentaires