Today’s PE landscape is characterized by cautious optimism. While fundraising has slowed, the focus remains on deployment – highlighting a shift toward investments into fewer, higher-conviction platforms.
There is a flight-to-quality mentality currently in place across the PE landscape, with a significant amount of capital in search of a few good opportunities. Such an environment tends to favor managers with a proven track record and a client base with whom trust is already well-established.
A market in transition
The PE industry is managing a prolonged period of macroeconomic friction (inflation, supply chain disruptions, global unrest, and other market uncertainties) by pursuing a more selective, disciplined approach. While headline deal volumes across the PE industry remain below the post-pandemic peak of 2021, fundraising and deployment trends suggest that this alternative asset class is not retreating but adapting and reshaping how and where it will deploy capital.
At the moment, there is a marked divergence between fundraising and deployment. In 2024, which is the last full year for which complete data is available, global fundraising fell to lows not seen since 2016, but, at the same time, capital deployment rose at a double-digit pace as managers leaned more heavily into operational value creation.1
Globally, PE dry powder remains elevated. Some estimate that closed-end private market funds held over $4.6 trillion by mid-2025, with more than half concentrated in funds aged two to five years.2 As this chart reflects, over the past 10 years, the dry powder portion of U.S. PE assets under management (AUM) has been increasing consistently along with the Net Asset Value (NAV) of funds, which represents capital that has been deployed. Today, dry powder remains at record highs despite a recent leveling off.
This aging capital base is increasing pressure to deploy, even as General Partners (GPs), usually the PE firm, remain selective on price and structure. Despite this, McKinsey’s 2025 Global Private Markets Survey revealed that a majority of Limited Partners (LPs), generally the investors into the fund, reported intentions to maintain or increase allocations to private markets. This is despite frustration around delayed distributions and exit bottlenecks, which remain the most frequently cited concern, followed closely by valuation discipline and regulatory risk.
How capital is flowing
The U.S. remains the gravitational center of global private equity capital. In 2024, U.S. PE deal-value rebounded sharply, surpassing pre-pandemic levels and reaching approximately $838 billion, up nearly 20% year over year.3 Megadeals reemerged as firms sought to deploy aging dry powder and take advantage of narrowing valuation gaps. Add-on acquisitions remain a central focus for U.S. PE investors, with transaction value reaching $267.6 billion by Q3 2025 and on track to surpass levels recorded in both 2023 and 2024.4 This sustained activity reflects a continued emphasis on add-ons as an efficient way to scale portfolio companies and drive value creation amid ongoing financing constraints and market uncertainty.
Roll-up as a core strategy
Roll-up strategies (purchasing multiple companies in the same industry and combining them into a single entity) have become one of the most consistent deployment mechanisms in the current environment. They are particularly effective in industries with:
- Structural fragmentation
- Recurring revenue
- Localized operators
- Opportunities for centralized operations and technology
The insurance intermediary sector is a prime example. PE-backed roll-ups – especially among retail brokers, wholesale brokers, managing general agents (MGAs), etc. – continue across the U.S., UK, and continental Europe. McKinsey reports global insurance M&A deal value of roughly $104 billion in 2025, with PE playing a central role in acquisition strategies.5 Large insurance brokers who commit concentrated investments to programmatic M&A make it easier for themselves to integrate acquisitions efficiently and leverage data/technology. Those commitments to programmatic M&A tend to deliver returns above the industry benchmark. As roll-up velocity remains high, integration discipline becomes the differentiator.
Looking ahead
At a macro level, PE is not short of capital – it’s in search of quality, and that simply shines an even brighter spotlight on insurance and wealth management firms. Capital is likely to continue flowing toward sectors that combine fragmentation with resilience. Insurance and wealth are emblematic of this trend, but not unique to it. The defining features of the next PE cycle will most likely be discipline, roll-up integration capability, and operational depth.
Contributions to this article by: George Bucur, Managing Director, Specialty Practice Co-Head, MarshBerry.
Sources:
- https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report-2025
- https://pitchbook.com/news/articles/global-private-market-funds-dry-powder-dashboard-2026
- https://www.cbh.com/insights/reports/private-equity-report-2024-trends-and-2025-outlook/
- https://kpmg.com/kpmg-us/content/dam/kpmg/pdf/2025/pulse-of-private-equity-q3-25.pdf
- https://www.mckinsey.com/capabilities/m-and-a/our-insights/insurance-big-deals-in-europe-and-continued-activity-in-the-americas-spark-m-and-a
