The Q4 2025 PE Briefing

The private equity industry went in a number of different directions in 2025. Global dealmaking value picked up in the second half of the year but the number of deals decreased. PE exits declined year-over-year, boosting growth in alternative strategies to generate liquidity. Investors remain committed to PE according to Preqin's latest investor survey, despite exercising greater caution in short-term commitments. Macroeconomic conditions improved markedly as the year went on, after a turbulent and unexpected start.

In this edition of the Bennett Jones PE Briefing, we look at the full-year data on private equity activity in Canada in 2025 as well as:

• how 2025 unfolded and what to look for in the coming year
• PE exit activity and what to expect in 2026
• trends in GP-stakes investing

The PE Market in 2025 and Looking Ahead

Private equity dealmakers are looking ahead to renewed growth in activity following an upswing in global transaction values during H2 2025. The third quarter was particularly buoyant with US$376.3 billion in aggregate deal value, according to Preqin. This was the best three-month tally since Q1 2022. In November, the CVCA reported the Canadian private equity market had a record-setting third quarter in 2025.

Several segments of private equity stood out with highly active years in 2025, including secondaries. The global secondary market volume now exceeds US$160 billion and fundraising is headed for another banner year. This is driven in large part by a soft PE exit environment. The flow of capital into secondaries stands in contrast to a weak fundraising environment overall in the PE industry.

The private credit market in Canada has grown to become a core allocation for institutional investors and has been a sharp area of focus in 2025. Private credit strategies have delivered outsized returns and the asset class is expected to continue growing—as deals become structurally more complex.

Leveraged buyouts were on the rise in 2025, spurred by private equity firms and sovereign wealth funds, and this is expected to continue into the new year. S&P Global data shows that PE's share of leveraged buyouts has been increasing since 2023.

The pace of exits continues to be one of the biggest challenges for PE firms. As the Wall Street Journal describes it, "Private equity has more housecleaning to do in 2026. Recent deals boosted optimism for the new year, but firms are still sitting on a glut of portfolio companies."

What to Expect in Exit Activity

Globally, private equity exit volume remains subdued, but average exit size increased in 2025, according to Preqin data. In Canada, PE exits continued to decline in 2025 by deal count. The aggregate value of announced or completed deals decreased in 2025, after rising from 2022-2024.

The outlook for PE exits in 2026 remains cautiously balanced between optimism and restraint. Reasons for optimism in 2026 include lower interest rates, continued pressure for exits from LPs and a reopening of the IPO window (as well as a renewed bullish sentiment in the capital markets generally), in the United States. Globally, the IPO market had its best year since 2022, according to Dealogic. The IPO market in Canada remains in a drought, however, with de-listings and companies taken private continuing to outpace IPOs on the TSX and TSXV.

Although high-quality assets are in demand for exits, valuation gaps continue to persist for many companies. PE assets nearing maturity are expected to exit at a slower pace. While the global economic picture has improved, uneven growth and "K-shaped" recoveries for certain sectors compared to others may continue. All of this could lead to a patchy recovery across the PE landscape. Preqin says that for now, it sees only tentative signs of a recovery in exit volumes.

GP-Stakes Investing

GP-stakes investing involves the sale of a minority, generally non-voting ownership interest in a GP entity by an asset manager to another investor. Historically, such transactions were undertaken almost exclusively by existing LPs seeking deeper alignment with the asset manager. A notable early example is the CalPERS 2001 acquisition of a minority interest in The Carlyle Group for approximately US$175 million.

Over the past decade, the buyer landscape has shifted. Specialized investment vehicles, commonly known as GP‑stakes funds, have emerged as the dominant acquirers of these interests. While a GP‑stakes investor may, in certain cases, be required to fund its pro rata share of the GP’s capital commitment and receive a corresponding limited partnership interest, the primary objective of GP-stakes funds is to capture returns linked to their share of GP economics, principally management fees and, when realized, carried interest. An early illustration of this evolution occurred when Affiliated Managers Group, a publicly traded asset manager known for acquiring GP-stakes, purchased a minority equity position from Goldman Sachs’ Petershill Fund I for approximately US$800 million. Since then, the strategy has continued to accelerate. There were US$3.4 billion of GP-stakes deals globally in 2024, the highest level since the record year of 2021, according to PitchBook data.

Although Canada has yet to see the emergence of funds dedicated exclusively to GP stakes investing, the model offers compelling opportunities for both GPs and LPs. For GPs, selling a minority, non voting stake can provide long awaited liquidity for employees, and some GPs also use the sale proceeds to strengthen their management team or facilitate succession planning. GP-stakes opportunities may also serve as incentives used to attract lead LPs. For LPs, acquiring a stake in the GP enhances alignment with the manager, and any carried interest realized can meaningfully offset overall fee expenses associated with investing in the fund. In this sense, GP stakes continues to evolve from a niche structuring solution into a recognized asset class, joining the ranks of private equity, real estate, secondaries, infrastructure, and other established alternatives.

Canadian PE Activity

Total Canadian private equity deal value was up and deal count was down in the final quarter of 2025. Fewer deals were done last year than in 2024 and the total value for announced or completed transactions declined from US$59.8 billion to US$48.3 billion in 2025.

Add-ons were the most common type of transactions—156 Canadian PE deals used this strategy in 2025. Buyouts (27), growth (26) and LP direct (21) rounded out the top five. LP direct deals and corporate carve-outs saw more deals in 2025 than the previous year.

Looking Ahead

The mood of the Canadian and global private equity markets improved as we moved through 2025. Growing sectors such as technology (including the burgeoning AI and AI-adjacent sectors) and defense will continue to create dealmaking opportunities. The AI boom has been one of the biggest stories in years, with tens of billions of dollars being invested in data centres, large-scale energy and industrial infrastructure, and the sector’s picks-and-shovels suppliers.

Challenges remain for private equity in 2026. Delayed exits, aging assets and slower fundraising may hold the industry back from a full recovery. On the buy-side specifically, add-ons and roll-ups into existing portfolios should continue to improve as sponsors look for EBITDA expansion. Conversely, GPs will likely want to remain patient and disciplined before executing on new platform investments. 

Bennett Jones Private Equity & Investment Funds Practice

The Bennett Jones Private Equity and Investment Funds group is a leader in Canada. Our clients include sophisticated financial sponsors who are looking to balance risk with expected return and who require tailored advice from the initiation of the investment phase through to exit. Bennett Jones represents all sides in private equity transactions, with particular depth on behalf of United States and domestic financial sponsors and Canadian institutional investors. To discuss the developments and opportunities in private equity, please contact one of the authors.

All numbers are according to Preqin data in US dollars unless otherwise stated. PE Deals data is for announced or completed deals where a Canadian company is the target, as of December 31, 2025.