The start of 2024 was marked by cautious optimism for a turnaround in the private markets. Hopes were high that interest rate cuts would ignite dealmaking, close pricing gaps, and revive exit markets. Interest rate cuts did materialize, but they came later and were smaller than anticipated, leaving the market relatively unchanged through the beginning of the year. This said, the second half saw momentum, with exits and dealmaking showing a modest improvement compared to 2023.
However, many of last year’s key themes ultimately carried into the year. Liquidity stayed a top concern, while venture capital continued to wrestle with the aftermath of ZIRP. Higher rates maintained strong interest in private credit and kept public asset deals aplenty, fueling the appeal of take-privates. Here, we examine the biggest trends and deals that shaped private markets in 2024.
LPs’ liquidity frustrations have loomed large over private markets this year. Hopes for a significant breakthrough in the exit logjam were thwarted by persistent sluggish activity. IPOs were scarce, M&A faced challenges, and sponsor-to-sponsor deals struggled with pricing gaps — though these began to narrow in the year’s second half.
With LPs restless for liquidity, GPs tapped creative tools like NAV loans and share buybacks. Yet, of all the ways sponsors took to the drawing board to generate DPI, continuation funds emerged as the standout tool, delivering much-needed cash while allowing investors to compound value in their prized assets.
Specifically, single-asset continuation funds (SACFs) dominated the year’s activity, marking a sharp expansion from their once-niche role in the secondaries market. In the first half of 2024, these vehicles composed 55% of GP-led secondary deals, with many GPs using the tool to extend value creation runways.
One of the most active users of the tool, Clearlake Capital, executed a $1 billion SACF process for Constant Contact. Advent’s CV for Xplor, Thompson Street Capital Partners’ deal for Gurobi Optimization, and many others underscore the growing popularity of this strategy.
And private equity isn’t the only asset class turning to CVs for liquidity. In a notable shift from historical norms, many top VC firms like Lightspeed, New Enterprise Associates, and General Catalyst embraced multi-asset vehicles this year, underscoring the pressing liquidity challenges in venture capital.
As CVs grow more sophisticated, they’re solidifying their role as a “fourth” exit option. However, LPs remain divided on the influx of CV proposals, citing alignment concerns — a debate likely to persist throughout the upcoming year.
Despite the US equity markets’ rally in 2024, take-private deals, which dominated private equity activity in 2023, consumed a notable slice of dealmaking this year. Transaction volume stayed elevated compared to pre-pandemic levels, though it didn’t match the highs of recent years, with most of the largest buyouts involving delistings.
Vista and Blackstone’s $8.4 billion purchase of Smartsheet, Permira’s $7.2 billion deal for Squarespace, and Bain Capital’s $5.6 billion acquisition of PowerSchool are just a few notable take-privates that grabbed headlines this year.
Private equity’s focus on acquiring public tech companies, especially SaaS firms, is no surprise. Many of these companies IPO’d during peak ZIRP years when growth was heavily rewarded. Today, this cohort has struggled to adapt to the capital efficiency public markets now demand, creating a prime opportunity for PE to step in and achieve the rule of 40.
Further, while US equity markets have experienced notable growth over the past year, depressed valuations across the pond have made London-based equities strong targets for PE. Darktrace, for instance, was acquired at an 8x EV/revenue by Thoma Bravo — a far cry from the multiples of public US cybersecurity peers like CrowdStrike (23x) and Cloudflare (20x).
Moving into next year, the big question is whether anticipated rate cuts will reshape the take-private strategy that’s dominated dealmaking in recent years. Lower rates could boost public market multiples, driving up transaction prices and potentially dimming the appeal of these deals.
Venture capital has experienced some of the most dramatic shifts in exits, fundraising, and deal dynamics among private asset classes. Following rate hikes in 2022, later-stage investments were the first to feel the pain. However, in 2024, the effects of ZIRP shifted downstream, with the stark bifurcation between the frothy Seed and cold Series A markets showcasing the most pronounced impacts.
In the Seed ecosystem, the influx of capital into this corner of VC in recent years continued to shape dealmaking, driving higher valuations. According to Carta, median seed valuations hit $14.8 million in Q3, surpassing the previous high of $14.6 million in Q2 2022. Several outsized raises this year underscore this upward trend.
Wave Forms AI raised $40 million in a seed round led by Andreessen Horowitz, securing a $200 million valuation, while Google Ventures’ $16 million investment in Bounti also stood out for its size. Though these deals may be outliers, they highlight the growing impact of corporate and multi-stage investors’ large checkbooks on Seed dealmaking.
Notably, this frothiness stands in stark contrast to the Series A market, where larger Seed rounds have raised investor expectations for growth, profitability, customer acquisition, and other performance metrics. As many seed-stage companies struggle to meet these elevated standards, the result has been a significant decline in graduation rates to Series A.
Will the Series A crunch remain a gatekeeper next year, filtering out companies that might have slipped through the cracks in a different macro paradigm? Or if rates continue to fall as expected, will it alleviate the pressure on investor expectations?
Driven by higher interest rates, structural tailwinds, and growing LP appetite, private credit has become one of the fastest-growing segments in private markets. While direct lending remains dominant, asset-backed finance — lending against contractual revenue streams secured by collateral — captured significant attention and enthusiasm from asset managers this year.
Spanning every corner of the economy — from mortgages and car loans to music royalties and equipment leases — Oaktree’s latest quarterly credit report labeled the ABF market as the “next chapter” in the evolution of private credit. This sentiment is evident in the wave of asset managers that flocked to the space this year.
Ares Management unveiled a $1.5 billion joint venture with Certified Automotive Lease Corporation to finance prime new vehicle leases, while SEC filings showed that Pacific Investment Management Co. (PIMCO) raised over $2 billion for its asset-based lending strategy. Meanwhile, Carlyle and KKR are set to acquire a $10.1 billion portfolio of prime student loans from Discover Financial Services.From an investment perspective, this niche offers key advantages.
Pooling hundreds or thousands of borrowers and diverse cash flow streams reduces the risk of default — unlike corporate credit’s vulnerability to a single point of failure. Additionally, appealing amortization schedules and the opportunity to diversify credit strategies beyond corporate credit further enhance its attractiveness.
Further, the ABF sector is well-positioned to benefit from the tailwinds of the AI revolution, with this financing emerging as a critical driver in supporting the extensive expansion of data center capacity. Blue Owl’s acquisition of data center partner IPI Partners underscores the growing significance ABF strategies will play in fueling the AI boom.
One trend standing apart from broader macroeconomic forces was private equity’s ongoing appetite for sports assets. In August, the NFL made its long-anticipated move to open its doors to institutional capital, becoming the last major US sports league to do so. And this month, the league approved its first-ever private equity deals. Arctos Partners, fresh off closing its second sports-focused fund, acquired a 10% stake in the Buffalo Bills, while Ares Management acquired a 10% stake in the Miami Dolphins.
Additionally, PE sports activity wasn’t confined to ‘blue-chip’ leagues. ‘Emerging’ sports gained traction, driven by attractive entry prices and massive growth potential — especially in women’s sports. Carlyle and the Seattle Sounders’ ownership group invested $58 million in the NWSL’s Seattle Reign LLC, while Sixth Street Partners took majority ownership of Bay FC, another NWSL team.
The activity highlights the growing role of institutional capital in North America’s sports ecosystem — an evolution that has lagged behind its global counterparts. European football leagues have long relied on institutional capital to navigate relegation and promotion dynamics, and many of the Gulf’s largest sovereign wealth funds have doubled down on sports to support local economies while accessing attractive returns.
However, rising team valuations and increasing capital needs to fuel evolving fan experiences have strained liquidity and growth options for North American sports teams, positioning private equity as a vital funding source. Looking ahead, lucrative, long-term media contracts, endless ancillary investment opportunities, and up-and-to-the-right valuation trajectories will continue to attract PE checkbooks.
Heading into 2025, much of the optimism private market participants had at the start of this year remains intact — perhaps with more confidence. Hopes are high for a robust IPO and M&A revival, and there’s a steady belief that the Fed will maintain its interest rate cuts to reach its 3% target. Yet, as was the case at the beginning of this year, uncertainty continues to loom, driven largely by geopolitical tensions and lingering questions about President Trump’s policy trajectory.
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