Bain & Company's 2025 PE annual report. My key takeaways:
• Sluggish distributions as funds continue to see fewer exits (albeit 34% higher than in 2023). The sluggish distributions have downstream effects in that LPs have nothing to reinvest, which made fundraising tough (down 23% from prior year).
• Bifurcation in that the established funds continue to attract capital, where those with a less distinct narrative struggle. (Note: we saw this on the asset/portco level in 2022/2023, where A+ assets continued to demand high multiples, but valuations fell meaningfully for B/C assets).
• In the absence of exits, creative liquidity solutions are being pursued: secondaries, continuation funds, NAV loans, minority & dividend recaps.
• Valuations in North America increased by 7% (to 11.9x EBITDA), but debt ratios only responded slightly. So, more equity is needed, which will lower returns.
• 29,000 companies represent $3.6T of unrealized value looking to exit.
• Distributions as a % of NAV have fallen from 29% (average 2014-17) to 11% in 2024. Related, at the fund's 5-year mark, total realizations decreased from 44% (2014-16 avg.) to 20%.
• Total PE fundraising landed at $1.1T, down from peak of $1.8T (2021). Yet the average fund is bigger than ever, showing LP's proclivity for established firms.
• The "returns" section wasn't very meaty, just stating that PE continues to outperform public equities, but by less of a margin than before (due to Mag 7 bull run). The graph suggests 10-year PE IRRs at 15-16%.
https://www.bain.com/insights/topics/global-private-equity-report/2025/
