Despite the uncertainty introduced by a second Trump administration, potential US tariffs, and a looming federal election in Canada, private market leaders are optimistic that dealmaking conditions will improve in 2025.That’s according to the PE Pulse 2025 report published last week by Torys LLP, in which 72 percent of report participants said they expect increased deal activity in the year ahead, while another 20 percent anticipate more buyer-friendly market dynamics.Between November and December, Torys interviewed 25 leaders in private equity, infrastructure, secondaries, and venture capital funds, as well as institutional investors and other alternative asset managers. The report sought insights into how private markets will fare in 2025.Stefan Stauder, a partner at Torys and co-head of the firm’s direct investment practice, says he was surprised by “the overarchingly positive sentiment” of the participants’ responses since few macroeconomic factors had shifted beyond lowered interest rates.However, Guy Berman, a partner at Torys who co-heads its direct investment practice with Stauder, says this optimism could be partly attributed to the fact that they spoke to some of the participants “post-Trump being elected but before the tariffs became a real viable threat.“The optimism came from the fact that we are back to a lower interest rate environment, inflation seems to be under control, supply chain issues from COVID seem to have worked themselves out,” Berman says. “During COVID, our clients found it was really difficult in some cases to look at the last couple of years’ of financial data when trying to extrapolate and come up with a valuation.“We’ve now had a couple of years post-COVID where financial statements have begun to normalize, and so our clients could have a lot more conviction on their investment thesis and price,” he adds.According to the Pulse report, that optimism has been somewhat dampened by geopolitical uncertainty. Forty-eight percent of responses identified uncertainty around the Trump administration as a potential challenge for dealmaking this year, while 28 percent of respondents said they were concerned about the impact of tariffs.Respondents also worried that some of Trump’s proposed policies would lead to higher interest rates and inflation and expressed concerns about Canada’s increased capital gains inclusion rate – which, if made into law, would have substantial return implications for private equity investors.Still, the report’s overarching outlook is positive. Eighty percent of participants said they believed the results of the US election would positively impact deal activity. Participants said having the election behind them meant that market participants generally knew what to expect moving forward. Some said they expected a loosening of antitrust regulations under the US Federal Trade Commission and business-friendly tax policies, both of which would help facilitate deal flows.Du
Gio. Gen 30th, 2025
