For private equity, 2025 was a year of longer hold periods and fewer but bigger deals, and some observers say that may well be a “new normal” for the industry.
Last year, total private equity deal value hit $2.6 trillion globally, up 19% over 2024, according to McKinsey & Company’s Global Private Markets 2026 report released last week. That marked the second-highest value on record, said McKinsey Senior Partner Alexander Edlich in a webinar on Wednesday. A $55 billion deal to take video game maker Electronic Arts private — said to be the largest PE deal in history — certainly played a role in driving up the overall value of deals last year.
That all came even as the total global deal count dropped 9% in 2025, mirroring trends in the wider M&A market. According to McKinsey’s research, deal count has been falling every year after reaching a relative peak of about 80,000 deals in 2021.
At the same time, private equity firms are now finding themselves holding onto assets much longer than they have in the past. McKinsey’s research pointed to a backlog of about 16,000 portfolio companies that have been owned by private equity for over four years in 2025. That was up from about 13,000 such companies in 2024.
“The backlog of PE-owned companies still on the books has never been bigger,” McKinsey researchers wrote in the report. “Holding periods also remain well above historical levels. The typical company in the portfolio of a general partner is now held on average for more than six and a half years.”
In Wednesday’s webinar, Edlich said that, comparatively, that’s essentially like “two holds almost.”
Investors and limited partners are, of course, still looking for their return on investment. The use of continuation vehicles, where private equity firms essentially sell their assets back to themselves, proved to be another popular way to do that last year, though the practice is not without controversy. “Liquidity solutions, like GP-led secondary transactions (the majority of which are continuation vehicles), have more than tripled in value in the last five years, rising from $35 billion in 2020 to $115 billion in 2025,” McKinsey officials said, noting that it’s estimated that about 14% of all sponsor-backed exits go through continuation vehicles.
“…liquidity for investors remains more a trickle than a flood,” they said. “Trends that first appeared to be ‘niche’ or temporary solutions after the dealmaking exuberance of 2020 and 2021, including the growth in secondaries, the rise of continuation vehicles, and the emergence of net asset value lending, now appear to be enduring — even growing—elements of this more technically demanding private equity terrain.”
McKinsey’s team said the research all shows that private equity is “maturing” as an industry, for better or worse. “Private equity now exhibits many of the signs of a much more mature industry that is much more technical and much more demanding,” Edlich said. “This is not your grandfather or grandmother’s private equity.”
As the company put it in the report: “At present, a strong case can be made that the traditional five-year holding period is in the rearview mirror, and new, adaptive liquidity solutions will remain a permanent and significant part of private markets infrastructure going forward.”
