Q3 2024 marked a continued rebound in private equity (PE), with emerging trends shaping deal strategies across various sectors. While healthcare, industrials, and technology sectors saw robust activity, new dynamics such as retail investor participation in private markets and shifting fundraising patterns also took center stage.
Below are the key trends shaping the private equity landscape in Q3 2024:
Strong Recovery in Dealmaking Activity
The U.S. private equity market experienced a significant recovery, with deal value up 23.1% year-over-year (YoY), driven by a surge in platform leveraged buyouts (LBOs) and growth equity deals. As deal value is projected to hit $864.3 billion for 2024, the recovery is anticipated to be the third-highest in history.
Retail Investors Expanding in Private Markets
Retail investors are increasingly influencing private markets, particularly in the venture capital secondary space.
Q3 2024 saw secondary transaction volumes soar by 72% YoY, reaching $69 billion, with full-year projections estimating volumes could hit $137 billion. Major PE firms like BlackRock and Apollo are developing products tailored to this growing class of investors. The rise of retail capital is expected to transform private markets despite challenges in liquidity management.
Healthcare PE Deals Continue to Lead
Healthcare remained one of the most active sectors in Q3 2024, with PE investment flowing into healthcare services and biopharmaceuticals.
Add-on transactions in medical devices and health IT contributed to this momentum, as firms like KKR and Carlyle led major acquisitions. Ongoing consolidation in healthcare is creating larger platforms, particularly in digital health, driving strategic interest.
Technology Sector Consolidation and Expansion
Technology continues to be a focal point for private equity, with add-on deals dominating activity. Companies in software, cloud, and cybersecurity attracted significant investment, highlighted by deals such as Blackstone and Vista Equity’s acquisition of Smartsheet for $8.4 billion.
As firms consolidate existing platforms and expand into new verticals, growth equity in fintech and cybersecurity has also seen sustained momentum.
Resurgence in Industrials
The industrial sector experienced a surge in PE interest, driven by shifts in supply chains and investment in advanced manufacturing.
Carveouts and specialized asset acquisitions became increasingly popular, as exemplified by Carlyle’s $3.8 billion deal for Baxter International’s kidney care division. This trend underscores the renewed interest in industrial assets, driven by global supply chain realignment and rising demand for automation technologies.
Retail and Consumer Services Sector Driving Add-ons
The consumer services sector, particularly within retail, saw 45% of all deals in Q3 2024, with most transactions being smaller add-ons valued at $50 million or less. The sector's emphasis on platform building reflects a long-standing trend of PE firms creating value by aggregating smaller, scalable companies. This is further underscored by a decade-long trend toward platform building across the consumer services and retail sub-sectors.
Fundraising Hits a Four-Year Low
Fundraising activity in 2024 has slowed, with Q3 seeing the lowest levels in four years. The average time to close a fund has increased to 19 months from 15 months in 2023, and Asia-Pacific’s share of global fundraising hit a record low of 7%. This reflects growing regulatory uncertainties and geopolitical tensions in key regional markets. Despite this, adjusted projections suggest the year’s totals will align with 2023’s $382.2 billion. Lean exits are contributing to the slowdown, but PE fundraising remains ahead of pre-pandemic levels.
Megadeals Resurgence
Despite a cooling off in some sectors, the resurgence of megadeals has been notable, with several deals valued over $1 billion. Roark Capital’s $9.6 billion acquisition of Subway exemplifies this trend, with potential deals like Sanofi’s $17 billion transaction on the horizon.
Megacap funds continue to pursue these large-scale deals aggressively, though platform-building via smaller add-ons also remains popular.
Add-On Deals and Carveouts Continue to Dominate
Add-on deals continued to represent 76% of all buyouts in Q3 2024, particularly in healthcare, technology, and industrials. These bolt-on acquisitions allow PE firms to consolidate portfolios, creating more integrated, scalable businesses. Additionally, carveouts, where corporations divest non-core units, accounted for 11.7% of U.S. PE buyouts, up from 9.1% in Q2.
Final Take
Q3 2024 saw private equity continue its recovery, with growth equity and add-on transactions driving the majority of deal activity.
New trends, such as the rise of retail investors and renewed interest in megadeals, combined with a focus on key sectors like healthcare, technology, and industrials, are setting the stage for further growth into 2025. However, the broader fundraising landscape remains challenging, particularly in Asia-Pacific, as geopolitical risks and slower exit environments weigh on investor sentiment.
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