As 2025 unfolds, private equity firms are approaching the market with caution. The wounds of 2024—a year weighed down by high interest rates, stalled exits, and global buyouts plunging to a five-year low of $392.5 billion—are still fresh. Yet, stabilizing valuations, the potential for a deal-making resurgence, and the promise of a more business-friendly U.S. administration are encouraging for the industry.

There is significant work to do—the industry’s dry powder continues to grow, expected to reach an estimated $2 trillion by early 2025. This accumulation reflects both steady fundraising and a cautious deployment approach. Liquidity pressures continue to cast the largest shadow over the market. Nearly 35% of assets have been held for five years or more, stretching well beyond typical hold periods. This overhang has eroded investor confidence, with 88% of investors considering declining re-investment with at least one of their current managers in the coming year.

Against this backdrop, we expect three key themes to define the year in private equity.

Tariffs Redefine the Supply Chain Landscape

Trade policy, once a peripheral concern for private equity, is now at the forefront.  The Trump administration has announced and redacted a number of tariffs on imports since taking office.  For portfolio companies reliant on cross-border supply chains, changes to tariffs are more than just headline noise. They have a direct impact on profitability, forcing companies to reassess sourcing strategies and cost structures. Many now face tough decisions: absorb rising input costs, pass them on to consumers, or pivot to alternative suppliers. Small businesses, in particular, struggle with this calculus, often lacking the leverage or flexibility to adapt quickly.

SSA & Company, a leader in strategy execution and operational performance improvement, is helping businesses rethink and restructure their supply chains to keep up with tariff-driven risks.  An agile and diversified sourcing network allows businesses to offset at least a portion of costs if components of the final basket are impacted by tariffs.

We focus on building flexibility and resilience.  Comprehensive scenario planning prepares companies for a range of tariff outcomes—whether diversifying supplier bases, investing in local manufacturing, or forging strategic partnerships to boost agility.

For companies concerned these tariffs will likely get taken off as fast as they were put into place, dynamic pricing models can be used to offset temporary cost dislocations (or the threat thereof).  Complete supply chains can take years to reshape, and pricing allows nimbleness to keep pace with added cost, or a potential opportunity if competitors overreact and add supply chain cost to avoid tariffs that end up lifting.  SSA & Company has developed pricing models for clients and helped companies use pricing as either a competitive or defensive lever as opportunities arise.  We’ve even used advanced analytics to predict how customers will react to pricing changes.

Preparing For the Surge in M&A Activity

Fortunately, anticipated policy shifts in Washington are helping to offset some of the anxiety caused by tariff volatility, creating a more favorable dealmaking environment. Reduced regulatory oversight and tax cuts are expected to catalyze a surge in mergers and acquisitions, including deals that may have been previously sidelined under stricter antitrust frameworks.

Interest rate reductions and a narrowing bid-ask spread are further fueling an expected surge in dealmaking. A recent survey of middle market CEOs, CFOs, and PE principals revealed M&A sentiment (those who characterize the M&A market as strong) was 54% for 2025, a significant increase from 47% in 2024 and a 5-year high. Optimism is particularly strong in sectors primed for consolidation, especially healthcare, where demographic shifts and evolving regulations are opening new platform opportunities in long-term care, retirement planning, senior housing, and chronic disease management.

But as deal activity picks up, many of which will be add-ons to existing platforms, closing the deal is only the first step.  Firms must ensure that post-merger integration is executed effectively to translate deals into EBITDA growth. When integrations are poorly managed, anticipated synergies can erode, leading to underperformance and, in some cases, complete value loss.

Consequently, private equity firms are partnering with SSA & Company to streamline operations and promote cultural alignment between merging entities. They’re also rehabilitating past acquisitions that underperformed due to flawed integration, helping them realign with their original investment theses and get back on track. We do this work shoulder-to-shoulder with teams while maintaining a light footprint to minimize disruption.

SSA & Company is also leveraging AI tools to speed data analysis and identify risks associated with integration.  We are able to ingest a significant amount of data in various forms and use technologies to highlight redundancy, capacity issues, timing issues, and other risks.  The use of these technologies allows our business resources to focus on business impact, letting the technology guide the identification of opportunities.

The Exit Bottleneck

As firms navigate trade volatility and ramp up dealmaking, they’re also contending with mounting pressure to clear a backlog of aging portfolio companies. With market conditions improving, many are now positioning these assets to capitalize on renewed buyer interest.

One exit strategy gaining traction is using continuation funds, which enable existing investors to exit positions while bringing in new capital. In the first half of 2024 alone, 49 continuation fund transactions were completed, providing much-needed liquidity for firms struggling with the growing exit backlog.

PitchBook forecasts that U.S. exit value will reach $396 billion in 2025, surpassing pre-COVID levels. But unlocking that value isn’t as simple as bringing companies to market. Buyers are more discerning than ever, demanding clear evidence of operational improvements, sustainable growth strategies, and future potential before committing to a deal.

Preparing a portfolio company for exit isn’t just about showcasing past performance—it’s about presenting a compelling vision for future growth. SSA & Company helps clients achieve this by identifying and executing high-impact operational improvements, developing clear roadmaps, and driving execution from start to finish.

At the heart of this process is our Control Tower℠, which integrates legacy systems and disparate data sources into a single source of truth. By giving managers real-time visibility into the metrics that matter, it enables data-driven decision-making, sharper performance tracking, and stronger business outcomes.

Contrary to traditional thinking, firms don’t need to pull every value-creation lever before exiting. In fact, leaving some opportunities untapped can make a company more appealing to buyers eager to add their own stamp to the business. The key is demonstrating meaningful progress while clearly outlining where future value can be unlocked. And so continues the cycle of investing, adding value, and moving on.