US Private Equity Market 2024–2033

Reports Description

As per the current market research conducted by the CMI Team, the US Private Equity Market is expected to record a CAGR of 8.6% from 2024 to 2033. In 2024, the market size is projected to reach a valuation of USD 523,634.6 Million. By 2033, the valuation is anticipated to reach USD 1,100,263.6 Million.

The US private equity market refers to the financial ecosystem where investors pool capital to acquire stakes in private companies, aiming to generate returns through various strategies like buyouts, growth equity, and venture capital.

Private equity firms raise funds from institutional investors, high-net-worth individuals, and other sources to finance these investments. They typically take an active role in managing and improving the performance of portfolio companies, often to achieve a profitable exit through methods like initial public offerings (IPOs), mergers, or sales to strategic buyers. The market plays a vital role in driving innovation, job creation, and economic growth.

US Private Equity Market – Significant Growth Factors

The US Private Equity Market presents significant growth opportunities due to several factors:

• Access to Capital: Continual availability of capital from institutional investors, pension funds, endowments, and high-net-worth individuals drives the US private equity market. This abundant capital enables private equity firms to pursue investment opportunities across various sectors and stages of company growth.

• Market Fragmentation: The diverse landscape of industries and businesses in the US presents numerous opportunities for private equity investment. Market fragmentation allows private equity firms to specialize in niche sectors, leveraging their expertise to identify undervalued assets and create value through operational improvements or strategic initiatives.

• Technological Innovation: Technological advancements drive opportunities for private equity investment in sectors such as software, healthcare IT, and e-commerce. Private equity firms capitalize on these innovations to identify high-growth companies and create value through digital transformation, product development, and expansion into new markets.

• Globalization: Increasing globalization provides private equity firms with opportunities to expand their investment horizons beyond domestic borders. Cross-border transactions, partnerships, and portfolio diversification enable access to new markets, diverse revenue streams, and potential synergies, driving growth and profitability in the US private equity market.

• Sectoral Growth: Growth opportunities abound in sectors such as healthcare, technology, and renewable energy, driven by changing consumer preferences, regulatory developments, and technological innovation. Private equity firms can capitalize on these trends by investing in companies positioned for sustainable growth and market leadership.

• Exit Strategies: Favorable market conditions, including robust public markets and strong M&A activity, create opportunities for private equity firms to execute successful exit strategies. Options such as initial public offerings (IPOs), strategic acquisitions, and secondary buyouts allow firms to realize returns on their investments and distribute capital back to investors, fostering continued investment and growth in the US private equity market.

US Private Equity Market – Mergers and Acquisitions

The US Private Equity Market has seen several mergers and acquisitions in recent years, with companies seeking to expand their market presence and leverage synergies to improve their product offerings and profitability. Some notable examples of mergers and acquisitions in the US Private Equity Market include:

• In 2024, Apollo and Athene announced a partnership with PGA TOUR golfer Patrick Cantlay, making him the first brand partner for both firms. Cantlay’s association aims to promote Apollo and Athene’s asset management and retirement services to a diverse clientele.

• In 2022, BlackRock Real Assets acquired SolarZero, a prominent player in the solar and smart battery sector, based in New Zealand. This acquisition enhances BlackRock’s presence in renewable energy markets and underscores its commitment to sustainable investing worldwide.

These mergers and acquisitions have helped companies expand their product offerings, improve their market presence, and capitalize on growth opportunities in the US Private Equity Market. The trend is expected to continue as companies seek to gain a competitive edge in the market.

COMPARATIVE ANALYSIS OF THE RELATED MARKET

US Private Equity Market – Significant Threats

The US Private Equity Market faces several significant threats that could impact its growth and profitability in the future. Some of these threats include:

• Market Volatility and Economic Uncertainty: Fluctuations in financial markets and economic uncertainty pose significant threats to private equity investments. Sudden downturns can depress asset values, increase financing costs, and disrupt exit opportunities, impacting investment returns and portfolio performance.

• Regulatory Changes and Compliance Risks: Evolving regulatory frameworks and compliance requirements introduce uncertainty and complexity into private equity operations. Changes in tax policies, antitrust regulations, and financial reporting standards may affect deal structuring, fundraising, and operational strategies, posing compliance risks and potential legal liabilities for firms.

• Liquidity Constraints and Debt Burden: Private equity investments often involve significant leverage, exposing firms and portfolio companies to liquidity risks. Tightening credit markets, rising interest rates or unforeseen cash flow challenges can strain debt servicing obligations, leading to financial distress and potential defaults, especially in highly leveraged transactions.

• Market Competition and Valuation Pressures: Intense competition among private equity firms for attractive investment opportunities can drive up valuations and reduce potential returns. Fierce bidding wars, inflated asset prices, and aggressive deal terms may erode investment margins and undermine the profitability of transactions, particularly in popular sectors or asset classes.

Category-Wise Insights:

By Investment Stage

• Early Stage (Venture Capital): Venture capital focuses on financing early-stage startups with high growth potential. Trends include increased investment in technology, healthcare, and fintech sectors, driven by innovation and disruptive business models. The rise of angel investors, crowdfunding platforms, and incubators accelerate funding for early-stage ventures, while regulatory changes and evolving market dynamics shape investment strategies and risk profiles.

• Growth Equity: Growth equity targets established companies with proven business models seeking expansion capital. Trends include investments in rapidly growing sectors like software as a service (SaaS), digital media, and healthcare technology. Increasing competition from strategic investors and crossover funds drives valuations higher, while operational expertise and value-added services differentiate growth equity firms in a crowded market.

• Buyout: Buyout transactions involve acquiring a controlling stake in mature companies to drive operational improvements and value creation. Trends include a focus on sector consolidation, distressed opportunities, and large-scale privatizations. Megadeals and club deals characterize the buyout landscape, with competition intensifying among global private equity giants. Environmental, social, and governance (ESG) considerations also influence deal sourcing and portfolio management strategies.

• Mezzanine: Mezzanine financing provides hybrid capital combining debt and equity for companies undergoing expansion or M&A transactions. Trends include increased demand for flexible financing solutions, particularly in middle-market deals. Mezzanine lenders face competition from alternative capital providers while evolving market conditions and regulatory changes impact deal structures and risk-adjusted returns. Mezzanine remains an attractive option for companies seeking growth capital with limited dilution.

• Others: The “Others” category may encompass specialty segments such as distressed investing, turnaround situations, and special situations investing. Trends vary widely within this segment, with opportunities arising from market dislocations, industry-specific challenges, and regulatory developments. Alternative strategies such as distressed debt, structured finance, and sector-specific funds cater to niche market demands, offering unique risk-return profiles and value-creation opportunities for investors.

Investor Stage

• Institutional Investors: Institutional investors, such as pension funds and endowments, allocate capital to private equity firms seeking long-term returns. Trends include a growing allocation to alternative assets, particularly in search of higher yields amidst low interest rates, and a focus on co-investments to reduce fees and enhance returns.

• High-net-worth individuals (HNWIs): HNWIs invest significant personal wealth in private equity, attracted by potential high returns and portfolio diversification. Trends include a rise in direct investments and participation in private equity funds focusing on niche sectors or impact investing opportunities.

• Family Offices: Family offices manage the financial affairs of wealthy families, often allocating capital to private equity for wealth preservation and growth. Trends include a shift towards direct investing to gain greater control and customization over investments, as well as increased interest in sustainable and socially responsible investment strategies.

• Fund of Funds: Fund of funds pool capital from multiple investors to invest in a diversified portfolio of private equity funds. Trends include a focus on manager selection and due diligence, as well as demand for specialized funds targeting specific strategies, sectors, or geographies to enhance diversification and risk-adjusted returns.

By Industry Focus

• Healthcare: Private equity investments in healthcare involve financing companies across pharmaceuticals, biotechnology, medical devices, and healthcare services. Trends include increasing investment in digital health startups, consolidation of healthcare providers, and innovations in telemedicine and personalized medicine.

• Technology: In technology, private equity firms target companies involved in software, hardware, internet, and tech-enabled services. Trends include investments in artificial intelligence, cloud computing, cybersecurity, and digital transformation across industries.

• Consumer Goods: Consumer goods investments encompass companies manufacturing or distributing products for consumer consumption. Trends include investments in direct-to-consumer brands, e-commerce platforms, sustainable products, and health and wellness brands.

• Energy and Infrastructure: Energy and infrastructure investments involve companies in energy production, utilities, transportation, and infrastructure projects. Trends include investments in renewable energy, smart grid technologies, transportation logistics, and sustainable infrastructure development.

• Financial Services: Financial services investments cover banks, insurance companies, fintech, and other financial service providers. Trends include investments in fintech startups, digital banking platforms, insurance technology, and wealth management solutions.

• Others: The “Others” category may encompass a diverse range of industries such as manufacturing, industrials, real estate, and business services. Trends vary depending on specific subsectors and market dynamics, but common themes include operational efficiency, technology adoption, and sustainability initiatives to drive growth and value creation.

By Deal Size

• Large Cap: Large-cap private equity deals involve significant amounts of capital and target established companies with substantial market capitalization. Trends in this segment include a focus on mature industries, such as healthcare and technology, and a preference for buyout transactions with stable cash flows. Large-cap deals often involve high-profile acquisitions and strategic partnerships aimed at driving operational efficiencies and unlocking value for investors.

• Mid-cap: Mid-cap private equity deals target companies with moderate market capitalization, offering growth potential and scalability. Trends in this segment include investments in sectors experiencing consolidation, such as consumer goods and industrial manufacturing. Mid-cap deals often involve growth equity investments, add-on acquisitions, and operational enhancements to accelerate revenue growth and expand market share.

• Small-cap: Small-cap private equity deals involve investing in companies with relatively low market capitalization, typically below $1 billion. Trends in this segment include a focus on emerging industries, such as fintech and renewable energy, and a preference for early-stage and growth equity investments. Small-cap deals often require active management and strategic guidance to navigate market volatility and achieve sustainable growth.

Report Scope

Competitive Landscape – US Private Equity Market

The US Private Equity Market is highly competitive, with a large number of manufacturers and retailers operating in the US. Some of the key players in the market include:

• The Blackstone Group Inc.
• Kohlberg Kravis Roberts & Co. L.P. (KKR)
• The Carlyle Group Inc.
• Apollo Global Management Inc.
• Bain Capital LP
• TPG Capital
• Warburg Pincus LLC
• CVC Capital Partners
• Advent International Corporation
• Hellman & Friedman LLC
• Vista Equity Partners
• Silver Lake Partners
• General Atlantic LLC
• Thoma Bravo LLC
• Providence Equity Partners LLC
• Others

These companies operate in the market through various strategies such as product innovation, mergers and acquisitions, and partnerships.

New players in the US private equity market are increasingly adopting innovation and development strategies to enter the industry. Emerging firms often leverage technology-driven approaches, such as data analytics and artificial intelligence, to identify investment opportunities and enhance portfolio management.

These players prioritize agility, digital transformation, and niche specialization to differentiate themselves and gain market share. Key players dominating the market include established firms like The Blackstone Group, Carlyle Group, and KKR.

They maintain dominance through extensive industry expertise, global reach, and diversified investment strategies. These firms leverage their deep financial resources, extensive networks, and track record of successful investments to attract capital and execute large-scale transactions, solidifying their position as industry leaders.

The US Private Equity Market is segmented as follows:

By Investment Stage

• Early stage (venture capital)
• Growth equity
• Buyout
• Mezzanine
• Others

By Investor Type

• Institutional investors
• High-net-worth individuals (HNWIs)
• Family offices
• Fund of funds

By Industry Focus

• Healthcare
• Technology
• Consumer goods
• Energy and infrastructure
• Financial services
• Others

By Deal Size

• Large-cap
• Mid-cap
• Small-cap