April 2025 Private Markets Investment Trends

Macro Environment and Allocator Sentiment

Despite lingering macroeconomic headwinds, private market allocations are on the rise. Surveys show a majority of wealth advisors intend to increase client exposure to private assets in 2025​ . Investors are navigating high interest rates, persistent (though easing) inflation, and policy uncertainty as the U.S. election year concludes. Notably, many expect a more supportive rate environment going forward, anticipating that stabilizing or falling interest rates will reinvigorate deal activity and exits​. Geopolitical instability has added a cautious tone, yet it is also directing capital toward sectors seen as defensive or strategic (e.g., energy security, defense technology). In this climate, allocators – from family offices and ultra-high-net-worth individuals (UHNWIs) to institutional limited partners (LPs) – are emphasizing opportunities with tangible value, inflation-hedging attributes, or secular growth drivers. They are positioning portfolios to balance long-term growth with near-term resilience, steering capital into areas of the private markets showing the most compelling risk-adjusted returns amid uncertainty. Strategic discipline is more essential than ever, guiding every investment decision and ensuring long-term success.

Commercial Real Estate (CRE) – Focus on Resilient Sectors

Commercial real estate has re-emerged as a key focus, particularly for family offices and other private wealth allocators. According to Knight Frank’s Wealth Report 2025, 44% of global family offices plan to expand their exposure to CRE over the next 18 months. The appeal is driven by real estate’s reputation as a hard asset hedge against inflation and volatility. With public markets turbulent and traditional lenders pulling back, cash-rich investors see an opening to acquire properties at favorable valuations. In particular, industrial and logistics facilities, multifamily residential, and data center assets are attracting outsized attention.​ These sectors boast strong fundamentals (e.g., e-commerce-driven warehouse demand, housing shortages, and digital infrastructure growth) and constrained supply, aligning with long-term investor themes.

Allocators are notably shying away from office properties in many markets, given shifting workplace trends and high vacancy rates. Instead, capital is rotating into segments with steady income profiles and pricing power. Interest rate dynamics play a crucial role: CRE valuations corrected in 2022–2024 as financing costs spiked, but a potential inflection point is approaching. Many investors expect that as central banks pause or begin cutting rates in late 2024 and into 2025, transaction volumes will pick up. Indeed, institutional outlooks foresee the real estate cycle bottoming out and gradually entering a new upturn as inflation subsides and debt costs ease. BlackRock’s 2025 outlook echoes this optimism, noting that after a challenging downturn, property values in high-conviction sectors (residential, industrial, logistics) have started to rebound, even as the U.S. office sector remains an outlier with persistent uncertainty​. In sum, real estate is being used as both an income-generating haven and a source of opportunistic buys – a cornerstone of private portfolios while public asset volatility remains elevated.

Early-Stage Venture Capital – Selectivity and Sector Concentration

In venture capital, a sharp bifurcation has developed between the “haves and have-nots.” Early-stage funding has pulled back even as headline venture investment rebounded on the back of a few mega-deals. In Q1 2025, global VC funding reached $113 billion – the strongest quarter since 2022 –yet this was highly skewed by late-stage rounds​. Crunchbase data shows late-stage investments rose over 147% year-on-year, while global early-stage investment fell to $24 billion, the lowest level in over a year​. Seed financings likewise dropped (down ~14% YoY)​. Venture capitalists are spending less on seed and Series A deals and concentrating firepower on a narrow set of scale-ups. PitchBook’s analysts describe a U.S. market “bifurcated between a handful of companies able to raise endless money and the rest…struggling through a capital shortage”​.

Generative AI is the standout sector commanding investor attention – and capital. An astonishing share of new VC dollars is flowing into AI-related opportunities. By some measures, over half of global venture funding in Q1 went to the AI sector, a record concentration driven by outsized bets on AI leaders. In the U.S., more than 70% of VC investment was tied to AI, boosted by a single $40 billion late-stage round for OpenAI. Even excluding that anomaly, AI still claimed roughly half of all U.S. venture capital by value in the quarter. This boom reflects investor conviction in the transformative potential of AI across industries, but it also means other sectors are receiving a smaller slice of the pie. Areas like fintech, consumer apps, and even climate tech have seen relative cooling as funds pivot to the AI race. Life sciences and healthcare remain active (supported by specialized investors and strategic pharma interest), but overall, the VC market is less broad-based than in prior years.

For allocators, this environment calls for heightened selectivity. Many institutional LPs curtailed new commitments to venture funds in 2023–24, managing exposure after the public market downturn and a slowdown in exit. However, there are early signs of stabilization. The exit outlook is improving with a pickup in venture M&A activity – global startup acquisitions in Q1 2025 reached $71 billion in value, the strongest quarter for venture exits since 2021. High-profile deals (e.g. Google’s planned $32B purchase of cybersecurity firm Wiz) signal that well-capitalized corporates are again willing to pay for innovatio.. A total of 12 VC-backed companies saw $1B+ acquisition exits in the quarter, spanning cloud computing, enterprise software, and AI​. This uptick in liquidity, alongside anticipation of an IPO market reopening later in 2025, is bolstering confidence. LPs and family offices are expected to selectively deploy capital into top-tier venture funds and co-investments, particularly those targeting the next wave of AI, deep tech, and other high-growth niches. Execution is key – with capital scarce for all but the best opportunities, investors are conducting extra diligence on unit economics, burn rates, and path to profitability for early-stage plays, favoring startups that can weather a still-challenging funding climate.

Buy-Side M&A – Selective Rebound and Thematic Deals

After a subdued 2023, the mergers and acquisitions landscape is cautiously improving in 2025. Dealmakers entered the year with optimism that the worst of the rate shock was over and that the conclusion of the U.S. election cycle would bring policy clarity. Indeed, corporate and private equity buyers are reactivating, but in a targeted manner rather than across the board. U.S. M&A data from the first quarter tell a mixed story: total deal value has been buoyed by several large transactions even as overall deal volumes remain below pre-2022 levels. For example, March 2025 saw U.S. M&A value for deals over $100M jump 25% year-on-year (to $217B) on the back of a few big-ticket transactions, while the number of deals actually declined amid ongoing economic uncertainty. In the middle market, activity is inching up – Q1 mid-market deal value was ~3.3% higher year-over-year​ – supported by an abundance of dry powder held by financial sponsors and strategic acquirers. With private equity firms sitting on record levels of committed capital, there is a strong underlying bid for attractive assets, especially as valuations rationalize.

Sector trends in M&A reflect where buyers see both urgency and opportunity. Technology M&A is leading the way: the tech sector saw deal value surge over 6× compared to a year prior, fueled by acquisitions in cloud services, cybersecurity, and AI (as companies race to acquire capabilities and scale in these fast-moving areas). Large-cap tech and telecom buyers, flush with cash, are pursuing strategic tuck-ins and transformative deals – underscored by the resurgence of multi-billion dollar acquisitions of VC-backed innovators​. Consumer products & retail also saw a flurry of activity (from virtually zero to $29B in deals in March) as companies respond to shifting consumer behavior and seek consolidation plays. Perhaps most striking, aerospace and defense deal values have spiked, rising nearly 9× year-on-year (albeit on a small basis). Geopolitical tensions and higher defense spending have prompted incumbents to invest in defense technology, cybersecurity, and supply-chain resilience, making that sector a hotbed of strategic M&A. Even traditional industries are witnessing consolidation waves – e.g., ongoing combinations in automotive and mobility (including EV supply chains), telecommunications, and banking – as firms look to build scale and cut costs in a slowing economy.

Private equity buyers, for their part, are tiptoeing back into the market with a focus on quality. Top-tier assets in resilient sectors (tech-enabled businesses, healthcare, essential services) are commanding premium valuations and intense competition when they come to market​. On the other hand, companies that were acquired or financed at lofty multiples during the era of cheap money remain challenging to exit; many are held longer or being restructured, contributing to muted overall exit volume. To get deals done in the current environment, acquirers are increasingly creative with deal structures – employing earn-outs, seller financing, minority stake purchases, and other structured arrangements to bridge the valuation gap. The overhang of high interest rates means leveraged buyouts are still more expensive, so deals are often less levered or financed through alternative capital (including private credit funds eager to lend). Notably, as the financing market improves, sponsors’ confidence is returning: new issuance of loans for PE-backed deals nearly doubled in late 2024, indicating credit markets are reopening​. This has allowed purchase price multiples to stabilize or even tick up in certain auctions, reflecting renewed optimism in bidders’ ability to secure financing.

Macroeconomic and policy factors continue to influence M&A strategy. While interest rates remain higher than the post-GFC average, the consensus is that rates have peaked – a potential tailwind for dealmaking in the latter half of 2025. However, executives are still weighing policy unknowns under the new U.S. administration. Trade policy shifts and regulatory scrutiny (particularly antitrust reviews for large tech or consumer mergers) are cited as reasons some deals have been delayed or aborted. Additionally, caution persists around recession risk: slower consumer spending, volatile energy prices, or other macro dips could quickly dampen the nascent recovery in deal flow​ . That said, the prevailing view in boardrooms and investment committees is one of “cautious optimism.” Well-capitalized buyers are prepared to act opportunistically if economic conditions stabilize further. Many advisory firms report robust pipelines and “window shopping” underway – buyers doing preparatory work so they can execute swiftly when confidence improves ​. Execution intelligence and timing are paramount; in 2025’s selective M&A market, patience and preparedness differentiate the winners.

Outlook: Strategic Discipline Amid Improving Conditions

Across CRE, venture capital, and M&A, private markets are gradually adjusting to a new equilibrium. The execution strategies in 2025 emphasize discipline and selectivity: allocators are favoring sectors with clear secular tailwinds or hard-asset backing while trimming exposure to areas with unresolved structural challenges. The good news is that the private markets appear to be entering a more favorable phase. Economic tailwinds – from an expected peak in interest rates to a tentative reopening of capital markets (M&A, IPOs) – are providing investors with greater confidence to deploy capital. As one leading asset manager observed, the “tide [is] turning” with improving liquidity and better exit prospects after a period of stagnation​. Indeed, for the first time in years, distributions back to LPs have begun to outpace capital calls, easing liquidity pressures and potentially freeing up capital for new commitments.

Nonetheless, careful calibration remains warranted. Macroeconomic volatility and geopolitical risks have not vanished; private investors are pricing in scenarios of slower growth and are stress-testing deals against downside cases (e.g., renewed inflation or policy shock. The remainder of 2025 is likely to see a continued flight to quality – whether that means prime real estate assets, startups with proven traction in critical technologies, or acquisition targets with defensive business models. SummerWind Capital and its peers are staying attuned to these trends, ensuring that capital is allocated to its highest and best use in an environment where opportunities abound but prudent risk management is essential. The current landscape rewards those with long-term conviction and agile execution, and we expect private market activity to accelerate further as confidence builds through 2025, led by the themes and allocator behaviors outlined above.

Sources: Knight Frank; Coldwell Banker Commercial ​benchmark-ormondbeach-fl.cbcworldwide.com​benchmark-ormondbeach-fl.cbcworldwide.com; Blackstone Advisor Pulse ​wealthbriefing.com; BlackRock Private Markets Outlook ​blackrock.com​blackrock.com; Bain & Co. Global PE Report 2025​ bain.com; Crunchbase News​news.crunchbase.com​news.crunchbase.com; PitchBook Data via Inc.​inc.com​inc.com; EY M&A Report Apr 2025 ​ey.com​ey.com; Solomon Partners​solomonpartners.com; McKinsey Global Private Markets Review​mckinsey.com​mckinsey.com.