Macro outlook clouds surging private equity take-private activity

An increasingly uncertain 2025 macroeconomic outlook threatens to sap the surge in public-to-private transactions.

The value of private equity- and venture capital-backed take-private deals jumped 32% year over year to $149.86 billion globally in 2024, according to S&P Global Market Intelligence data. It was the highest annual total for private equity-backed public-to-private transactions recorded in at least five years.

The previous year's rise in take-private value indicates private equity firms are finding plenty of overlooked or underappreciated public companies to acquire, even after a strong year for markets when the S&P 500 gained 24% year over year and the MSCI World ended the year up nearly 17%.

But the same challenges that slowed global M&A in early 2025 may make it harder for private equity fund managers to unlock the value in delisted companies, said Christian Westra, a partner in Ropes & Gray LLP's private equity transactions group.

"The risk that I'm hearing people are most concerned about is the volatility in the market and the macroeconomic environment, the sense that people don't know whether there are going to be tariffs applicable to them that will impact their businesses," Westra said.

Tailwinds

Near-record levels of private equity dry powder and more accessible debt for deals were key ingredients in the 2024 rise in take-private activity, Alex Edlich, a senior partner at McKinsey, said. That has not changed so far in 2025.

A lot of public market value is still tied up in a relatively small group of high-flying companies, such as the Nasdaq's Magnificent Seven technology stocks. Likewise, there are still hundreds of publicly traded companies getting relatively little attention from investors and analysts, even though their boards may be particularly receptive to a take-private offer, Edlich added.

"It's easy to trade very well when you have an easy, simple-to-understand story. And if you don't have it, you can be extremely frustrated by the valuation that's put on [the company by] the market," Edlich said.

With those tailwinds in place, private equity-backed take-private activity started 2025 stronger than overall private equity M&A.

Global take-private deal value totaled $16.08 billion between Jan. 1 and Feb. 28, Market Intelligence data shows. That was nearly 75% of the full first-quarter total of $21.49 billion a year earlier.

Overall private equity-backed M&A was further off its year-ago pace by comparison. The $67.89 billion in private equity-backed deal value recorded globally between Jan. 1 and Feb. 28 was just 58% of the full first-quarter 2024 total.

Global trends

Five of the 10 largest take-private transactions announced or completed since Jan. 1, 2023, targeted listed companies in the technology, media and telecommunications sector. They include the largest take-private transaction recorded over that time period: Silver Lake Technology Management LLC's $21.5 billion bid for the about 70% stake it did not already own in sports and entertainment company Endeavor Group Holdings Inc.

While eight of those 10 largest private equity-backed take-private deals targeted US-based companies, Europe has seen a larger surge in take-private activity, fueled in part by a spate of megadeals. The 2024 value of take-private deals rose 65% year over year in Europe, while it was up 38% year over year in the US, Edlich said.

Ropes & Gray's Westra said firms are also eyeing take-private opportunities in Japan, where a corporate reform movement is opening new opportunities for private equity dealmaking.

Outlook

KKR & Co. Inc. co-CEO Scott Nuttall sounded bullish on take-private deals on the firm's February earnings call, noting that public companies with a market capitalization in the $1 billion-$5 billion range were particularly attractive targets.

"We continue to see that as a big opportunity for us globally," Nuttall said.

– Read about private debt's growing share of buyout financing. – Catch up on the brightening outlook for private equity-backed consumer deals. – Read about trends in private equity deals for asset managers.

Westra said the big question now is whether rising uncertainty linked to the potential impact of US tariffs dims the apparent enthusiasm for take-private deals. If that uncertainty rattles public markets, corporate boards may put the brakes on deal talks.

"There's no question in my mind that public company boards may, in some cases, be reluctant to engage with potential buyers until the market stabilizes a bit for fear of being taken advantage of due to a temporary dip in the market," Westra said.