All of this has slowed down strategic mergers and acquisitions. In 2023, global M&A recorded its lowest level in a decadeunderscoring the slowdown in deal-making post-pandemic. Global The variety of PE exits fell from the height of 4,383 in 2021 to three,796. While it is not at full speed, The global share of PE dry powder continues to be around 2.5 trillion US dollars from mid-2025, and the pressure to offer capital stays high, at the same time as exit channels narrow. Several forces underlie the recent spread. Among them: the dearth of traditional exit routes, a looming maturity limit and the necessity for LPs to release money.
First, rising financing costs have limited leveraged buyouts and widened the bid-ask gap in M&A transactions. Continuing funds allow managers to retain assets they believe in and supply investors with liquidity options. Another factor is the upcoming maturity limit. More than 50% of PE funds are actually six years old or older, with 1,607 funds expected to liquidate in 2025 or 2026. Continuation funds enable firms to extend value creation without forced sales.
Ultimately, these funds reply to investor demand for flexibility. LPs may exit for immediate liquidity or switch to chase future uptrends. New investors gain access to proven assets with lower blind pool risk. Continuation funds boast a loss rate of 9% in comparison with 19% for buyouts that supply higher risk-adjusted returns.
