Welcome to this week's edition of The Private Capital Compass, brought to you by Private Capital Global (PCG), a Sparc Group company. 

We've been heads-down managing our fall conference schedule, but PCG is back with the latest market insights, deal activity, and value-creation strategies shaping private capital.

In this edition, we explore a surge in deal activity signaling a buyout revival, from marquee transactions like the $55 billion Electronic Arts buyout to broad adoption of AI in dealmaking, and a growing focus on healthcare and professional services as sectors ripe for operational value creation. 

We examine how private equity is reshaping sports, including the Big Ten and National Women’s Soccer League, as institutional investors inject capital into legacy and emerging markets.

We also spotlight Heidrick & Struggles’ $1.3 billion take-private deal, where strategic PE partners and management are aligning incentives to accelerate growth, and highlight how PitchBook is driving transparency across the $15.5 trillion private capital ecosystem. 

Finally, our deep dive assesses the deployment–exit disconnect, offering guidance on navigating a market defined by abundant dry powder, tepid exits, and the operational and technological levers driving performance in 2025.

Compass Points

Key insights at a glance:

• Rally in Q3 Dealmaking Hints at a Buyout Revival — But Exit Challenges Loom: According to a recent WSJ article, the third quarter of 2025 delivered the most robust private-equity deal flow in years, with an estimated 5,083 transactions totaling about $595 billion. That pushes year-to-date volumes to ~15,107 deals worth $1.606 trillion — on pace to be the second-largest year ever, behind only 2021. The resurgence is anchored by marquee deals like the $55 billion Electronic Arts buyout and broad participation across deal sizes, signaling renewed confidence among sponsors and strategic acquirers. Yet the rebound comes with a caveat: exit activity remains tepid, swelling a backlog of unsold PE-held companies now in excess of 31,700 globally. The takeaway for private capital allocators: we may be entering a period of accelerated deployment, but realizing returns will depend heavily on reactivating exits and managing legacy inventory.

• Deloitte Survey: 86% of Dealmakers Now Use GenAI, Signaling a New Era of Data-Driven M&A: Deloitte’s new 2025 GenAI in M&A Survey reveals that Generative AI has quickly become embedded in dealmaking, with 86% of corporate and private equity leaders now using the technology—most of them adopting it within the past year. The study highlights growing investment momentum, as more than 80% of respondents plan to increase GenAI spending in 2025 while expecting measurable ROI within one to three years. Current use cases are concentrated in pre-sign phases like strategy, target identification, and due diligence, but optimism is high for broader integration across the full deal cycle. Still, concerns around data security and quality remain top of mind. The findings underscore a major inflection point: dealmakers are moving beyond experimentation and demanding tangible results from AI-driven insights and automation.

• CA Tightens Rains on PE in Healthcare: California has become the latest state to crack down on private equity’s influence in healthcare, with Governor Gavin Newsom signing Senate Bill 351 into law. The measure bars financial firms from influencing medical decisions, inserting noncompete clauses, or silencing providers critical of management practices—steps aimed at protecting clinical independence amid concerns that PE ownership drives up costs and degrades care quality. The bipartisan law, modeled partly after Oregon’s stricter rules, reflects a broader state-level push to rein in financial control of patient care as federal reform efforts stall. With private equity investment in healthcare having quintupled over the past decade, California’s move underscores growing scrutiny of short-term profit models in long-term care sectors—signaling that oversight, not prohibition, may define the next phase of healthcare dealmaking.

• Private Equity’s Playbook Expands in Sports: The Big Ten Conference is reportedly finalizing a landmark $2.4 billion private equity deal with UC Investments that would give the fund a 10% stake in a new entity, Big Ten Enterprises, responsible for managing media and sponsorship rights. Following similar moves by the SEC and Big 12, the Big Ten’s entry underscores how institutional investors are reshaping sports economics by injecting liquidity and financial discipline into legacy structures once closed to outside ownership. The deal coincides with a surge in private equity activity across the sports ecosystem, including this week’s investment into the National Women’s Soccer League (NWSL), which continues to attract institutional capital seeking growth in women’s sports. 

• PitchBook Charts the Future of Private Capital: Transparency, Data, and AI Redefine a $15.5 Trillion Market: Once an opaque corner of finance, the $15.5 trillion private capital market is becoming increasingly transparent and PitchBook is at the center of that shift. In a new CBS News feature, the firm is highlighted for transforming how investors access, analyze, and act on data across private equity, venture capital, and private credit. With tools powered by AI, proprietary benchmarks, and deep global datasets, PitchBook is helping institutions, from pension funds to endowments, navigate an increasingly complex landscape marked by slower venture funding, surging private credit, and mounting pressure for measurable returns. Backed by Morningstar, PitchBook’s mission to democratize access and bring public-market-level visibility to private assets reflects a broader evolution in the asset class.

Deep Dive: Navigating the Deployment-Exit Disconnect

According to a recent WSJ article, the third quarter of 2025 delivered a resounding message to private capital markets: dealmaking is back. With an estimated 5,083 transactions totaling approximately $595 billion, Q3 represented the most robust private equity deal flow in years. This surge pushes year-to-date volumes to roughly 15,107 deals worth $1.606 trillion—positioning 2025 to become the second-largest year on record, trailing only 2021's frenzied peak. Yet beneath this impressive revival lies a complex reality that demands careful navigation from private capital allocators.

The Mechanics of Revival

The dealmaking renaissance reflects a confluence of favorable conditions. Federal Reserve interest rate cuts initiated in late 2024 fundamentally transformed financing economics, making leveraged buyouts attractive again after the punishing rate environment of 2022-2023. Debt markets reopened enthusiastically, with lenders comfortable underwriting transactions backed by quality assets and sustainable cash flows.

Marquee transactions anchored the quarter's momentum, highlighted by the $55 billion Electronic Arts buyout. But the rebound extended across all deal sizes, from sub-$100 million platform acquisitions to multi-billion dollar take-privates, indicating broad-based confidence among financial sponsors and strategic acquirers.

Private equity firms, sitting on record dry powder exceeding $2.5 trillion globally, faced mounting deployment pressure. Limited partners demanded action after years of elevated management fees on undeployed capital, creating urgency that drove accelerated investment across sectors and geographies.

The Exit Bottleneck Challenge

Q3's dealmaking enthusiasm must be tempered by sobering reality: exit activity remains decidedly tepid. While sponsors enthusiastically deploy capital, they struggle to return funds to investors from existing portfolios. This imbalance has created a swelling backlog of PE-held companies now exceeding 31,700 globally.

The exit paralysis stems from multiple factors. Public equity markets remain inhospitable to traditional IPOs, particularly for middle-market companies. Secondary buyouts face valuation gaps as disciplined buyers clash with sellers anchored to peak-vintage entry multiples. This creates a paradox: LPs receive capital calls for new investments while awaiting distributions from maturing funds, straining portfolio cash flows and pushing allocation percentages above target levels.

The AI Investment Wave

Artificial intelligence emerged as Q3's dominant investment theme, transcending sector boundaries and captivating both financial and strategic buyers. The technology's maturation from experimental novelty to operational imperative has fundamentally altered investment theses across private equity portfolios.

Generative AI captured particular attention, with applications spanning enterprise software, customer service automation, and data analytics. Private equity firms recognized that AI capabilities reduce customer acquisition costs while improving lifetime value. Transaction activity concentrated around AI-native platforms and infrastructure providers, with valuations ranging from 10-20x revenue for high-growth companies demonstrating clear profitability paths.

Beyond pure-play AI companies, private equity firms initiated transformation programs across existing portfolios, investing incremental capital to integrate AI capabilities into legacy business models. 

Healthcare's Structural Opportunity

Healthcare emerged as another Q3 focal point, driven by sector-specific dynamics distinct from AI trends. The industry's structural inefficiencies—representing 20-30% of total healthcare spending—present compelling value creation opportunities for operationally-focused firms.

Transaction activity concentrated in healthcare services, particularly companies serving aging populations and managing chronic diseases. Demographic tailwinds remain undeniable: 10,000 Americans turn 65 daily, each representing lifetime healthcare expenditures exceeding $500,000. Private equity assembled multi-site platforms across specialties from ophthalmology to behavioral health.

Healthcare IT attracted significant capital, with firms targeting revenue cycle management, prior authorization automation, and EHR optimization. These businesses generate recurring SaaS revenue while addressing worsening provider pain points.

Regulatory developments supported momentum. CMS policy changes expanded reimbursement for telehealth, remote monitoring, and value-based care arrangements, transforming business models from speculative to bankable. The healthcare labor shortage created opportunities for technology-enabled staffing solutions and workflow optimization platforms.

Balancing Opportunity Against Portfolio Reality

The Q3 dealmaking revival presents private capital allocators with critical decisions. Deployment opportunities are evident: deal flow has returned, financing is available, and pricing remains below 2021 peaks. However, the exit bottleneck cannot be ignored. Deploying new capital while carrying elevated unrealized value from prior vintages creates portfolio construction challenges.

For general partners, deployment must be accompanied by equally aggressive exit execution. Firms navigating this environment successfully will combine disciplined underwriting with creative exit structuring, leveraging secondary transactions, continuation funds, and dividend recapitalizations as bridge mechanisms.

The Q3 surge represents genuine momentum, yet realizing returns depends heavily on reactivating exits and managing the growing inventory of PE-held companies, requiring both opportunistic aggression and strategic patience.

Deal Spotlight: Heidrick & Struggles to Go Private in $1.3B Consortium-Led Buyout

Transaction: Heidrick & Struggles International, a global leadership advisory and talent solutions firm, has agreed to be acquired by a consortium led by Advent International and Corvex Private Equity, with participation from several family offices and Heidrick’s own leadership. The all-cash deal values the company at $1.3 billion, with shareholders receiving $59 per share, representing a 26% premium to its 90-day volume-weighted average price. The consortium plans to support growth across executive search, interim talent solutions, leadership assessment, and consulting, while implementing a new equity plan to attract and retain top talent. 

Why It Matters:  This transaction highlights several important trends in private capital and strategic dealmaking. First, the deal underscores the continuing appetite of private equity for high-quality, niche professional services firms where operational expertise and recurring revenue models offer stable growth opportunities. By taking Heidrick private, Advent and Corvex can implement longer-term strategic initiatives without the pressures of quarterly public reporting, enabling investments in technology, talent development, and global expansion.

Second, the significant participation of Heidrick leaders signals a broader shift toward aligned equity incentives in PE transactions, where management engagement and ownership stakes are leveraged to drive performance and retain top talent. Finally, the transaction illustrates PE’s flexibility in deal structuring, combining all-cash public shareholder premiums with targeted equity retention for internal stakeholders, underpinned by committed financing from multiple banks. 

Now is the moment for deal teams to lead with both conviction and creativity. Deployment discipline must coexist with proactive exit planning from day one. Sponsors who bake in flexible liquidity pathways through continuation vehicles, secondary sales, and structured recapitalizations will maintain agility while others face capital gridlock.

Equally, opportunity lies in aligning with the defining themes of this cycle: AI integration and healthcare transformation. The firms generating alpha are those not just chasing growth sectors, but building operational edge: embedding generative AI into portfolio value creation, driving margin expansion in healthcare services, and converting thematic trends into measurable outcomes.

As deal teams enter the final stretch of 2025, the mandate is to deploy boldly, manage actively, and exit creatively. The next performance cycle will be defined not by who invests fastest, but by who navigates the disconnect with foresight and executional excellence.

Opening & Closing Remarks from Erik Boender, Vice President & COO, Private Capital Global (a Sparc Group company)

Thank you for reading this week’s edition of The Private Capital Compass. As Q3 deal momentum demonstrates, private capital is entering a period defined by both opportunity and complexity. At PCG, we believe navigating this environment requires a combination of strategic deployment, disciplined exits, and operational resilience. From AI-driven dealmaking and healthcare transformation to emerging investments in sports and professional services, these themes are shaping the next wave of value creation.

That’s why we continue to bring together leading voices in private capital through invitation-only events in Austin, Boston, Chicago, Miami, New York, and San Francisco, where operators, sponsors, and investors exchange insights on market trends, technology integration, and human capital strategies. Subscribe to The Private Capital Insiders podcast, hosted by Frank Scarpelli, to hear directly from industry experts and dealmakers navigating today’s evolving market.

We look forward to keeping you informed, inspired, and equipped to turn insight into action across your portfolios and investments.