While we are facing an evolving and dynamic market, and uncertainty remains the name of the game, private equity dealmakers remain nimble and will use this time to prepare for certain themes practitioners hope will emerge in 2025, including a potential increase in exits and a narrowing of valuation gaps between buyers and sellers once market dynamics reach a more stable place. In this keynote interview, Chicago partner Erika Lopez provided insights on expected trends for 2025, including the effects of protectionist measures such as tariffs.
Erika also discusses the current state of the industry from a gender parity perspective and the importance of mentoring and sponsorship. While the private equity industry has made some progress in diversity initiatives, driven by external pressures for gender metric reporting, significant gaps remain at senior levels, necessitating intentional strategies for retention, promotion, and active sponsorship of women to achieve true gender parity.
Key Talking Points:
The new administration in the US was anticipated to create a more business-friendly environment, potentially easing regulatory challenges for private equity, although sector-specific issues may persist.
The uncertainty created by some of the protectionist measures favored by the new administration, such as tariffs, will create challenges in the market and thus such policies may have contradictory implications for deal-making.
Clients are continuing to focus on creative ways to exit investments via M&A, continuation vehicles, partial sales or minority deals, and evaluating noncore businesses to find ways to create value.
There was an increase in exits in 2024, although they remain lower than in previous years. The average hold period for investments has reached a 10-year high, indicating ongoing liquidity pressures.
Technology, particularly artificial intelligence, is identified as a significant driver of change in the private equity sector, influencing both operations and investment opportunities.
The need for ongoing investment in diversity initiatives within private equity to address gender disparities, particularly at senior levels.
Creating a supportive community among women that is ultimately beneficial from a business perspective.
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