Private Equity Slows Sharply in Q2 2025 as Tariff Uncertainty Bites

What’s New

Global private equity dealmaking plunged in Q2 2025, with total announced investment dropping to $363.7B across 3,769 deals, the lowest volume since Q3 2020, according to KPMG’s Pulse of Private Equity Q2’25. The slowdown was most pronounced in Asia and the Americas, as investors delayed deals pending clarity on U.S. tariff policies — despite blockbuster U.S. transactions like Blackstone’s $11.5B TXNM Energy buyout.

Why It Matters

The sharp contraction underscores how geopolitical tensions and trade uncertainty can freeze even deep-pocketed investors. With trillions in dry powder still available, the pause is more about timing and risk mitigation than lack of capital — setting the stage for a potential rebound if macro headwinds ease.

Big Picture Drivers

• Trade Uncertainty: U.S. tariff policy shifts drove a wait-and-see approach, especially for cross-border deals.

• Regional Focus: PE firms favored domestic and regional assets over global plays to mitigate supply chain and tariff risks.

• Sector Resilience: Energy, infrastructure, healthcare, and AI-related infrastructure continued to attract strong interest.

• Exit Momentum: Global PE exit value hit $501.9B midyear, on pace for the best year since 2021, driven by large IPOs and acquisitions.

• Capital Overhang: Significant dry powder remains, but deal committees are raising the bar for approvals.

By The Numbers

• $363.7B — Global PE investment in Q2’25, down from $505.3B in Q1’25.

• 3,769 — Number of global PE deals, lowest since Q3 2020.

• $214B — PE investment in the Americas, 59% of global total.

• $501.9B — Global PE exit value at midyear, highest pace since 2021.

• $9.9B — Brookfield’s planned AI data center investment in Sweden.

Key Trends to Watch

• Tariff Clarity Boost: Any resolution in U.S. trade negotiations could unlock pent-up deal activity in H2 2025.

• Dual-Track Exits Rising: Improving U.S. IPO conditions may spur more IPO-plus-private-sale strategies.

• AI Infrastructure Rush: Data centers and energy generation for AI workloads are emerging as top investment themes.

• Continuation Vehicle Scrutiny: LP pushback could force more traditional exits and faster portfolio rotations.

The Wrap

Private equity is in a holding pattern — not from lack of funds, but from a deliberate recalibration of risk in an unsettled trade environment. With strong exit values, resilient sectors, and massive capital reserves, the industry is poised for acceleration once macro fog lifts.