2024 was a bad year for big deals. According to Preqin’s Q3 2024 Private Equity Quarterly Update, despite the number of exits increasing from 550 to 570 year-over-year, the aggregate value of those exits was stagnant, making for smaller exits overall during the period.

“In terms of exits, it's been slow in both 2023 and 2024,” said Victoria Chernykh, an assistant vice president of research insights at Preqin and lead analyst on the report. “Deal makers and GPs are more eager to sell and be satisfied with the price offered by the market in the current environment on the smaller end. So in 2024, we haven't really seen many large exits.”

Not only were there very few large exits, but those that managed to make it to market didn’t exactly pull off the kind of numbers that they needed to. As we explored in our Sponsor-to-Sponsor Exits 2024 report, sponsor-to-sponsor exits were most common amongst exits of companies worth over $100 million in enterprise value and were associated with underperforming assets. 

According to Preqin, these types of transactions constituted the second-most common exit type for the quarter overall, including exits of companies worth under $100 million in enterprise value, increasing from 197 to 205 year-over-year. Sales to strategic acquirers – a strategy Privitas has found to be top-performing in its research – were the most common for the entire population of exits, up 11 percent year-over-year. 

“During 2024, smaller exits were more successful than larger ones, which makes perfect sense. In a persistent higher interest rate environment, smaller exits are easier to execute because of their lower entry point,” explained Chernykh. 

She continued: “Interest rates are high, which limits the value-added creation potential for larger companies and deals because they rely on multiple expansion when interest rates go down. At the smaller end of the market, value can be created anytime regarding what the rates are, although when the rates are higher it's always more challenging.”

However, as interest rates change, this too is due to change. Indeed, at the tail end of 2024, inklings of this became apparent in the market. 

“In 2024 exits also picked up a bit, particularly in the second and third quarters,” explained Chernykh. “Interest rates are going down which is going to help PE players of all sizes, but particularly those larger ones… cuts might help to bring back more large exits from [Q3 2024] on.”

This is a key reason why industry leaders across Wall Street – especially those in private equity – believe mega deals will make a comeback in 2025 as the second Trump administration takes power, according to reporting from Reuters.