Deal Dynamics: Higher Values, Lower Volumes, and What It Means for PE

As private equity professionals look ahead in 2026, the state of deal flow and deal size in late 2025 offers valuable context on market dynamics. 

While activity has rebounded from earlier softness, patterns in deal volume and transaction value suggest a market that is more selective, more value-oriented, and increasingly concentrated in larger transactions,  all of which should inform how firms deploy diligence resources in the year ahead.

Deal Value Climbs Despite Volume Softness

One of the most notable trends of 2025 was the divergence between deal value growth and deal count contraction.

As of November 2025, total deal value had already surpassed $828 billion globally - exceeding full-year 2024 totals - while the number of deals was down year-over-year (11,625 vs. 13,825 in 2024).

This pattern, fewer deals, higher aggregate dollar value, highlights a broad shift seen throughout the year: sponsors are focusing on bigger, higher-impact transactions and selectively allocating capital where they see clear strategic or operational advantage.

Momentum Behind Large Transactions

Data from 2025 reinforces this view, much of the deal value growth came from larger transactions. 

In Q3 alone, global private equity transaction value jumped nearly 43% compared to the prior year, even though the number of deals declined.

Sectors like:

• Technology
• Media
• Telecommunications
• Healthcare
• Financial Services 

are leading this trend, driven by sponsors’ appetite for transformative assets that can deliver outsized returns through operational improvement and strategic integration.

Meanwhile, mid-market and smaller deals account for a smaller share of total value, even if they remain part of the volume mix, suggesting sponsors prefer fewer, but larger and more strategically significant transactions.

Driver: Capital Allocation and Dry Powder

This divergence in volume and value also reflects how private equity capital is being allocated:

• Abundant dry powder continues to pressure sponsors to be selective with deployment.
• Valuation alignment between buyers and sellers has improved, contributing to larger deal formation.
• Financing conditions, while uneven, have supported sponsors willing to back longer holding periods or operational transformations.

Combined, these factors have pushed sponsors toward higher-value instead of higher-volume dealmaking, and positioned private equity to pursue fewer but deeper engagements requiring richer diligence and integration planning.

What This Means for Diligence

For PE deal teams, this trend of higher deal values with selective volume has direct implications for diligence priorities:

• More emphasis on differentiators: when sponsors focus on 8-figure plus transactions, the operational and strategic risks uncovered in diligence have greater leverage on valuation and integration strategies.
  
  
• Deeper pre-close analysis: larger deals often span more complex customer dynamics, competitive threats, and pricing structures, increasing the need for thorough and specialized insight streams.
  
  
• Advanced integration readiness: Sponsors increasingly use findings from specialized diligence (such as customer intelligence) not only to negotiate but also to inform execution planning immediately after signed LOIs.
  
  

Put another way, the size and quality of deals in late-2025 are reshaping how PE firms think about diligence. It’s not enough to check reference boxes; sponsors now need higher-resolution insight into customer behavior, competitive positioning, and revenue durability to justify large bets and secure returns.

Looking Ahead in 2026

With strategists forecasting continued expansion in deal value and resilient volume growth into 2026, sponsors should prepare for a dynamic 2026 where selectivity, speed, and depth of diligence matter more than ever.  

For diligence teams, that means building workflows around:

• customer intelligence
• competitive signals
• pricing power
• and retention risk 

…all within compressed LOI windows. 

The market is rewarding sponsors who can pair capital conviction with nuanced understanding of the businesses they acquire.

Firms that adapt their diligence playbooks to these structural trends will be better positioned to win coveted assets, negotiate from strength, and integrate with precision in 2026.

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