As we enter 2025, our private capital experts from across the firm explore the key trends that will shape the deployment of private capital in the coming year.1. Increased dealmaking and exit activityAfter M&A activity in the second half of 2024 was relatively modest across the US, UK and Europe, dealmaking confidence returned towards the end of 2024 and that is expected to continue through 2025. The level of activity and the deal values will be sector-specific, influenced by complex and constantly changing political and economic conditions globally and regionally. This has already been illustrated in the UK by the rise in gilt yields and the larger retailers already indicating that they are expecting a challenging year ahead, in spite of a positive financial performance during the Christmas trading period.However, within the UK, we expect mid-market deal activity to recommence after a pause in the last quarter of 2024 following a high amount of deal activity during the run-up to the UK Budget in October. We anticipate the narrowing between buyer’s and seller’s price expectations to continue and the increasing use of deferred consideration and buyer equity in deal structures to feature. Alongside the large amounts of uninvested capital, particularly in the private equity and private debt markets, we think this will likely unlock exit activity and bring forward new deals. The sectors where we anticipate enhanced deal activity are financial services and professional services (please see a link to our articles here), real estate, healthcare and media. 2. Convergence of public and private marketsThe lines between public and private markets are becoming less defined, creating greater opportunities for investment outside of the public markets. This will be driven by company boards and their advisers seeking more flexible financing structures and investors looking to increase the diversity in their portfolios. Two specific areas of interest for the UK market are:Share trading for private companiesWill regulations finally be adopted to support share trading in private company shares? This is the objective behind the establishment of a Private Intermittent Securities and Capital Exchange System (PISCES) to create greater liquidity for those who hold shares in private companies.PISCES will be a new regulated market for private company shares allowing intermittent trading on a multilateral system. PISCES will create the framework within which operators will be able to establish their own trading venues to offer structured trading events (known as trading windows) that can be used by broad pools of investors. The UK Government’s responses to its consultation on PISCES confirms, among other things, that:the trading venues will not facilitate capital raising through the issuance of new shares;
institutional and certain retail investors will be permitted to buy and sell shares (including High Net Worth, self-certified and sophisticated investors, i
