The Impact of Tariff Turbulence on Global Private Equity Activity in 2025

As the global private equity (PE) landscape evolves, Bain & Company’s recent report sheds light on the shifts caused by tariff turmoil, casting a shadow over an otherwise optimistic outlook for the industry. In this analysis, we delve into the findings of the 2025 Private Equity Midyear Report, focusing on the implications for dealmaking, market pressures, and strategic opportunities for firms willing to adapt.

The Slowdown in Dealmaking

Following a bullish first quarter in 2025, which saw a significant surge in deal values and counts, the PE sector is now grappling with a gradual decline in activity due to rising market uncertainties. Specifically, April marked a sharp 24% decrease in deal value compared to the first quarter's average, alongside a 22% drop in total deal count. This shift is largely attributed to the chilling effects of tariff-related disruptions, which have put a damper on investor confidence just as it began to return.

Despite the substantial deal value of $189 billion recorded in the first quarter—double that of $95 billion from the previous year—Bain reports that these high numbers are now overshadowed by deteriorating conditions. The current slowdown is compounded by an almost total cessation of IPO exits, as many public offerings have been delayed or canceled entirely due to prevailing market conditions.

Seizing Opportunities Amid Uncertainty

While the immediate outlook appears challenging, Bain encourages PE firms to adopt a proactive stance. The report highlights that a staggering $1.2 trillion in dry powder remains available for investment by buyout funds, indicating that, despite short-term hurdles, opportunities still exist for savvy investors. Hugh MacArthur, chairman of Bain's Private Equity practice, emphasizes the importance of strategic buyers in this context, noting that market disruptions often give rise to unique opportunities.

This is particularly pertinent in 2025, where Bain asserts that firms that can maintain a forward-thinking perspective will likely be the ones to capitalize on forthcoming market conditions. The firm suggests that emerging exit opportunities will soon arise, and those who are prepared to act will have a decisive advantage.

Liquidity Challenges Continue

Even as opportunities present themselves, the overarching issue of liquidity in the PE sector remains a pressing concern. The stagnation in exits has left general partners with numerous unsold portfolio companies, impeding their ability to return capital to limited partners (LPs) and further complicating fundraising efforts. Bain's findings suggest that many recent fundraising vintages are continuously failing to meet historical benchmarks, leading to increasing dissatisfaction among LPs regarding the reliance on partial or minority exits rather than traditional full realizations.

As the liquidity crunch continues to limit options for many funds, Bain indicates that the secondaries market—though growing—is still unable to address these broader liquidity needs, making up less than 5% of global PE assets. This reality has led to a tightening of capital supply, exacerbating existing challenges in fundraising that have seen global buyout fund collections decline for five straight quarters.

Navigating the New Landscape

In the wake of ongoing volatility, Bain posits that PE firms must adopt fresh perspectives on deal strategies. The report underscores a fundamental transformation in global trade dynamics, noting that nearly all portfolio companies will require reevaluation of their operational models. In a landscape where classic forecasting approaches may no longer hold, firms are urged to focus on delivering value through improved earnings, leveraging modern technology such as generative AI to enhance productivity.

With the second half of 2025 approaching, Bain’s insights suggest that successful PE players will not just react to existing conditions but will actively engage with new realities in the market. By aligning strategic initiatives with emerging opportunities and maintaining agility in operations, firms can position themselves effectively for recovery and growth in a post-tariff environment.

In summary, Bain & Company’s report paints a picture of an industry at a crossroads—confronted by both immense challenges and unique opportunities. As the dust begins to settle from tariff-related turmoil, only those firms that can deftly navigate these turbulent waters will emerge as leaders in the private equity landscape.