Top Takeaways from Bain’s 2025 Private Equity Report

Bain’s recently released 2025 Private Equity Report highlights key trends that shaped 2024 and offers insights into the forces likely to define private equity in the coming years. Among the many topics discussed, several stood out:

• While global buyout AUM fell for the first time since Bain began tracking in 2005 (by 2%), it doesn’t necessarily signal a downward trend. LPs have had to cut down on new allocations amid the thwarted exit environment, and as exit momentum picks up, this will likely see a reversal. 

• While private equity saw a healthy recovery in exits by year-end, the rebound was primarily driven by large deals rather than a broad recovery in deal volume. As a result, liquidity remains a major theme for the industry this year.

• Fundraising dropped 24% YoY across private market asset classes. Of the funds that did close, capital concentrated heavily in the hands of established-brand name firms. However, not all strategies suffered. Direct lending posted a 3% increase reflecting LPs’ growing appetite for private credit.

• Generating alpha is more challenging than ever, with intense competition driving up valuations and higher debt costs limiting leverage-based returns. In this environment, a differentiated approach to value creation is crucial, and GPs are increasingly turning to AI and data to drive efficiencies and growth in portfolio companies.

Here, we explore these takeaways from the report in more detail and offer our own perspectives on the resulting implications for LPs and GPs across the private market ecosystem. 

Liquidity Remains a Major Theme with Significant Implications Across the Ecosystem

Easing interest rates, narrowing credit spreads, and growing confidence in the macroeconomic outlook helped bridge a stubborn gap between buyer and seller expectations, reversing a two-year decline in private equity investments and exits. However, improvements in deal and exit value have been much more pronounced than the recovery in the number of deals. 

According to Bain, in 2024, the average deal size hit its second-highest level on record, mega deals of $1 billion or more accounted for a staggering 77% of total deal value, and large take-private transactions composed nearly half of North American deals valued at $5 billion or more. 

Beneath the surface, this makes the recovery appear less robust, propped up by a key trend — firms are primarily offloading their highest-quality assets. For LPs, $3.2 trillion in unrealized net asset value (NAV) is still tied up across 29,000 unsold companies. PE payouts as a percentage of NAV are hovering at record lows, and in venture, the situation is even more dire.

Ultimately, PE firms aren’t organically generating cash at the scale needed to satisfy LPs, increasingly using liquidity tools to return capital. In 2024, the report noted $360 billion was generated through minority stake sales, dividend recapitalizations, secondaries, and NAV loans. Though among these, continuation vehicles (CVs) appear the clear favorite. 

Exits will likely continue to build on 2024’s rebound, but the extent of the recovery this year remains uncertain. Inflation is sticky, with the Federal Reserve noting further rate cuts this year would likely come in the second half if at all. Tariffs, percolating geopolitical uncertainty, and stiff entry requirements for IPOs add further uncertainty. And regardless of where exits land, they won’t solve the overhang left from a two-and-a-half-year dry spell. 

Chronograph’s Take: How the Liquidity Environment Impacts LPs and GPs

In the absence of exits, swelling private equity NAVs have complicated the math for new commitments. Yet, despite pacing challenges, LPs’ confidence in private markets remains strong with many continuing to increase allocations. 

As LPs navigate their liquidity appetite while expanding PE targets, one thing is clear: longer hold periods will likely persist long after the ZIRP hangover fades and the exit recovery eventually materializes due to broader structural factors.

Persistent elevated deal multiples, for one, has made the hunt for high quality assets at attractive entry points a difficult undertaking, and GPs are increasingly focused on compounding value in assets they know well alongside trusted management teams.

The industry’s extended DPI horizons likely require LPs to explore more sophisticated cash flow forecasting than traditional Monte Carlo-style simulations can accommodate. Do GPs tend to hold companies until they hit specific revenue growth or MOIC thresholds? Access to that kind of granular data could become essential for forecasting liquidity more effectively. 

Secondaries Growth

Further, for a large cohort of LPs, private market exposure remains a priority, but enduring 15 years plus of illiquidity is not an option. This dynamic will continue to fuel the rise of secondaries, and in the years ahead, LPs will need to refine their stance on CVs. To date, most have opted to take the liquidity, redeploying cash into new PE commitments to maintain vintage diversification.

Is the opportunity set for that released capital as attractive as the assets held in the continuation fund? Given that these funds are delivering returns in line with the broader buyout sector with narrower dispersion, it’s a factor LPs shouldn’t overlook. Efficient access to underlying company metrics — and how they have evolved over time — will be crucial for LPs as they develop their own investment theses and navigate these transactions, often under tight deadlines.

Resource Management Challenges for GPs

The increase in the number of ‘active’ assets sitting in PE portfolios means deal teams are juggling more companies, and partners are sitting on more boards, stretching many firms thin. Centralizing firm-wide data collection and valuation workflows can allow deal teams to drive greater efficiencies across expanding portfolios and give partners instant access to insights for board meetings. 

Private Equity Fundraising Challenges Persist

Fundraising often lags deal activity, and 2024 made that clear as muted distributions took a toll. Global buyout funds raised 23% less capital than in 2023, with fewer funds closing — and over a third of those that did took two or more years to cross the finish line.

But the bigger narrative has been the widening bifurcation in the market. Capital is increasingly concentrating in large, brand-name firms. Without a differentiated value proposition, other funds have found raising the next fund an uphill battle. The situation is especially bleak for emerging managers.

While persistent uncertainty has driven this ‘flight to stability’, this trend is unlikely to reverse even as conditions improve. Major firms continue expanding their product offerings, positioning themselves as one-stop shops for LPs across strategies.

To be more competitive, many firms are using co-investment opportunities to attract LPs eager for better economics, greater involvement in portfolio management, and the chance to sharpen their investment acumen. And the benefits go both ways. Higher debt costs have made co-investment capital an attractive supplement to larger equity checks.

Notably, while securing capital from traditional LPs becomes more difficult, capital sources are evolving. Bain estimates that private wealth and sovereign wealth funds will drive roughly 60% of AUM growth in private markets over the next decade. 

Chronograph’s Take: Impact of Fundraising Climate on LPs and GPs

In a market saturated with funds, track record alone isn’t enough to secure new LPs. GPs must clearly define and communicate what differentiates them, from sourcing and value creation to deal execution, exit strategies, and portfolio construction. Adding value beyond performance, alongside proactive communication and transparency are also essential to ensuring LPs remain committed across multiple fund cycles. 

This demands a more sophisticated investor relations function — as Bain put, “one that operates more like a top-tier B2B sales organization.” IR teams need the right infrastructure and data access to provide transparency on portfolio events, respond to ad-hoc reporting requests, streamline communication and ultimately, provide LPs with a ‘best-in-class’ customer experience. 

Data also provides deal teams with a competitive edge in the investment process. For example, at an event we hosted last year, Bowmark Capital, a Chronograph client, shared how aggregated data has helped them win competitive deals. By showcasing the impact of their value creation and growth strategies across comparable businesses and sectors, they build trust with potential portfolio companies. It’s this kind of differentiation that resonates with LPs. 

Further, as private equity firms tap into new capital sources like private wealth, they’ll need to consider how to meet the needs of this investor base that differ significantly from traditional LPs. Retail investors require more frequent liquidity and valuations, demanding innovation in product structures and technology.

How LPs Should Think About Co-Invest Opportunities

For LPs looking to access co-investments, the real challenge is execution and developing the appropriate internal infrastructure. Co-investments come with risks, and GPs are selective, favoring partners who can move on deals with speed and confidence.

Many leading institutions have developed robust co-invest processes. Canada’s Maple 8 has long pursued co-investment deals in their private market portfolios, while US giants like CalPERS and CalSTRS have recently ramped up programs to expand their co-investment reach, reduce management and carried interest fees,  and strengthen relationships with GPs.

Generating Outperformance Will Prove Hard Moving Forward

Private equity’s next decade will look very different from its last. Gone are the powerful tailwinds of zero interest rate policies, frothy IT budgets, cheap financing, and globalization. All is to say — generating outperformance will require a higher bar moving forward. 

Competition for deals is one challenge. Private equity’s substantial stockpile of dry powder underscores how difficult it has become to find attractive deals at the right price. Valuations and asset prices remain high despite higher interest rates and financing costs. In North America, the average buyout multiple dipped briefly in 2023 but rebounded to 11.9x EBITDA last year, while Europe hit a record 12.1x EBITDA. 

Value creation that incorporates margin expansion alongside revenue growth proves increasingly critical. Driving outperformance isn’t just about achieving top-line growth — it’s about how efficiently that growth is achieved. Expanding earnings is becoming a necessity, marking a shift for private equity after a decade where margin expansion was more of a bonus than a mandate.

For example, over the past decade, revenue growth drove 52% of value creation in software returns while multiple expansion accounted for 42%. Margin growth? Just 6% — and nearly all of that came from top-quartile deals.

As firms grapple with mounting return pressures, AI is emerging as a powerful tool to drive efficiency across portfolio companies. Many have already made significant strides, integrating AI into key processes — from go-to-market strategies to code generation — streamlining operations and boosting performance.

And broadly, optimism around AI’s potential to reshape value creation is growing among GPs. Vista Equity Partners, for example, thinks AI’s impact on both top and bottom lines will rewrite the Rule of 40, pushing the new benchmark for revenue growth and margins to 50% or even 60%.

Chronograph’s Take: What a Higher Bar for Returns Means for LPs and GPs

The pressure on returns underscores the advantage of firms with strong data and analytics capabilities. Not only does the right tech infrastructure enable GPs to access more granular insights like operational KPIs, but by aggregating and harmonizing portfolio data, firms can identify successful strategies and replicate those learnings across their holdings to drive synergies. For example, if a value creation lever is proving effective in an industrial company, centralized data allows that insight to be more quickly recognized and applied to other portfolio companies.

However, the biggest value creation opportunities often arise from unlocking interoperability across a GP’s entire investment portfolio. The most sophisticated firms are using data warehousing to consolidate all their investment information in one place, revealing deeper insights. For instance, by combining CRM and portfolio monitoring data, GPs can leverage AI to analyze how performance aligns with different diligence factors from the pre-investment phase, offering a more granular view of what drives success post-investment.

While much of the buzz around AI centers on its potential to drive value creation in portfolio companies, firms are also keen to harness the technology internally to uncover insights and boost efficiencies. However, AI adoption for internal operations is still in its early stages. Ultimately, building a foundation of structured, trusted data will be critical to ensuring the success of these AI-driven initiatives.

Implications for LPs

A tougher return environment for GPs is set to widen the gap between top and bottom-performing funds in the years ahead, making manager selection more critical than ever. With a less favorable investment landscape, gaining visibility into performance and understanding return attribution — both at the fund and underlying holding levels — becomes essential. AI and tech solutions are offering LPs powerful tools to navigate this, from advanced benchmarking to deeper insights into fund performance and beyond.

Request a demo to learn why leading LPs and GPs use Chronograph to discover insights in their private capital portfolios, refine investment decision-making, and more.