Welcome to the second edition of The Private Capital Compass, brought to you by Private Capital Global. As we chart our course through another dynamic week in private markets, I’m reminded that clarity and agility are more important than ever. At PCG, a Sparc Group company, our mission is to help you cut through the noise and focus on what truly matters for value creation. We hope this edition of The Private Capital Compass provides the timely insights and perspective you need to lead with confidence in today’s evolving landscape.

This week, we spotlight five essential developments across private markets, curated to keep you sharp in a landscape that’s long on noise and short on clarity. From strategy shifts to macro signals, each story is selected to inform your decision-making without slowing you down.

In this edition, PCG unpacks new findings from FTI Consulting’s 2025 Private Equity Value Creation Index, offering a clear view into how leading firms are rethinking the playbook. As global uncertainty persists and traditional paths to return narrow, we examine why value creation is entering a new phase and what it means for how sponsors, operating partners, and leadership teams build enduring equity value.

Compass Points

Key insights at a glance

• Geopolitical volatility persists: Despite a fragile ceasefire between Israel and Iran, markets remain cautious. Oil prices have stabilized but remain elevated, with Brent crude hovering around $76 per barrel.

• Deal momentum slows: After a robust Q1, private equity deal activity decelerated in Q2, influenced by sustained high interest rates and geopolitical uncertainties.

• Strategic exits dominate: Trade sales continue to be the primary exit route, accounting for a significant portion of deal value, as sponsors seek liquidity amid challenging IPO markets.

• Dry powder accumulates: Private equity dry powder has reached a record $2.6 trillion, with deployment challenges persisting due to valuation gaps and market volatility.

• Action required: Firms are advised to adopt a cautious yet opportunistic approach, focusing on sectors with resilient demand and exploring alternative deal structures.

Market Pulse

• Equities: S&P 500 (SPY) at 610.45 (+0.55%); Dow Jones (DIA) at 432.62 (+0.64%)

• Commodities: Brent crude at $76.20/barrel; USO ETF at 74.42 (+1.51%)

• Deal Flow: Q2 private equity deal volume shows signs of slowing compared to Q1, amid macroeconomic headwinds.

Deep Dive: The New Playbook for Value Creation

Private equity is entering a defining era. With market multiple expansion no longer a given and valuations under pressure, firms face an imperative to create value. The days of short holds and quick wins are fading. According to FTI’s 2025 Private Equity Value Creation Index, the median holding period now exceeds 5.8 years, and the expectations placed on management teams and operating partners have never been higher.

What’s emerging is a more complex, longer-term value creation mandate that blends operational rigor with sustainable growth and selective innovation. Familiar levers like cost structure optimization, working capital efficiency, and IT transformation remain essential. But they’re now table stakes. The firms that will outperform are those that invest in underutilized, high-potential plays: customer retention, sales force effectiveness, product expansion, and intelligent use of AI.

Yet execution is the hurdle. Levers like AI and M&A are seen as valuable but remain infrequently and ineffectively applied. Only 23% of firms use AI consistently, and a third report disappointing outcomes. The gap between perceived value and actual impact underscores a broader tension: firms are defaulting to what’s known, not necessarily what works best for the next phase of growth.

At the core of this evolution is mindset. Top performers are moving away from episodic interventions toward continuous, aligned execution. They treat cost savings as a catalyst, reinvesting in capabilities that drive durable expansion. Leadership alignment, culture, and talent development are no longer soft priorities, they are strategic imperatives.

As economic and geopolitical headwinds persist, the takeaway is clear: differentiation now lies in execution. Not just in knowing which levers to pull, but in having the patience, precision, and internal coordination to pull them well.

Deal Spotlight: EQT Exits Pioneer in $1.1 Billion Sale to CarUX

Transaction:
EQT’s BPEA Private Equity Fund VI and VII have agreed to sell Pioneer Corporation, the iconic Japanese automotive technology company, to CarUX, a Taiwanese smart cockpit solutions provider and subsidiary of Innolux Corporation, for approximately $1.1 billion. The deal is expected to close in Q4 2025, subject to customary regulatory approvals.

Why it matters:
This marks a significant exit for EQT, which acquired Pioneer in 2019 and led a comprehensive turnaround. The transaction not only validates EQT’s hands-on value creation model in Asia but also signals growing investor appetite for advanced automotive tech platforms with software-defined capabilities.

Trend signal:
The deal highlights private equity’s role in enabling industrial transformation. EQT's operational overhaul—centered on capital discipline, governance reform, and innovation—transformed Pioneer into a high-margin, cash-generating leader in smart vehicle technology. Strategic buyers like CarUX are now stepping in to extend this growth story, underscoring increasing cross-border consolidation in next-gen mobility solutions.

Navigating Turbulence with Strategic Discipline

Markets don’t wait for clarity. With geopolitical tensions simmering, trade dynamics shifting, and economic signals mixed, private equity leaders are once again being tested by external volatility and internal pressure. From oil price swings to slowed deal flow, the path ahead demands sharper focus and greater adaptability.

In times like these, reactive strategies won’t suffice. Now is the moment for pragmatic opportunism, doubling down on fundamentals, reassessing value levers, and remaining agile in both investment and execution. Liquidity may be abundant, but deployment discipline is more critical than ever. Corporate carve-outs, sector-specific carve-ins, and strategic divestitures are all tools in the modern PE toolkit.

Leaders should actively scenario-plan for macro disruptions, revisit portfolio priorities, and ensure alignment between deal thesis and day-to-day execution. Stay close to your operating teams, double down on resilient sectors, and prepare to act decisively when windows open.

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

Thank you for reading this week’s Private Capital Compass. In times of uncertainty and change, the right information and a steady hand make all the difference. At Private Capital Global, a Sparc Group company, we’re committed to supporting your success with actionable insights and strategic perspective. If you’d like to discuss any of these topics further, please don’t hesitate to reach out. Here’s to navigating the road ahead together!