Private equity megadeals surged in 2024 as firms took advantage of improving M&A conditions to put the industry's massive stores of dry powder to work.

Private equity firms announced or completed 18 megadeals valued at $5 billion or above in 2024, more than double the prior-year total and the fourth-highest annual tally of PE-backed megadeals since at least 2000, according to S&P Global Market Intelligence and Preqin data.

Topping the list was the $16.3 billion acquisition of drug manufacturer Catalent Inc. by Novo Holdings A/S, the private equity and venture capital arm of Novo Nordisk Fonden.

The raft of super-sized private equity deals arrived amid a broader recovery in PE-backed M&A, which recorded a nearly 25% year-over-year increase in value in 2024 after two consecutive annual declines. Pete Witte, global private equity lead analyst for EY, said the mood of PE dealmakers appeared to improve over the course of 2024 as interest rates fell and buyers and sellers began to find common ground on asset valuations.

"Measures of [PE] sentiment have been fairly high, and they got higher as the year wore on," Witte said.

Dry powder shrinks

Another tailwind to PE dealmaking in 2024 was the growing pressure on PE fund managers to put more of their dry powder to work, Witte said. Dry powder — an industry term for the capital raised from limited partners but not yet invested — fell year-over-year for the first time since 2010.

Global dry powder levels stood at $2.51 trillion in December, down roughly 6% from a record $2.66 trillion at the end of 2023, according to Preqin.

Deal breakdown

The technology, media and telecommunications sector produced seven of private equity's 2024 megadeals, more than any other sector, according to Market Intelligence data. Next came the financials sector with four PE-backed megadeals.

Nine of the 18 private equity megadeals announced or completed in 2024 targeted companies headquartered in the US or Canada. Europe followed close behind with eight, a performance boosted by robust take-private activity in the UK.

Private to public and back again

Massive take-private deals were a trend beyond the UK. Scott Voss, managing director and senior market strategist for private equity firm HarbourVest Partners LLC, noted a subset of PE's 2024 megadeals — including the $7.31 billion acquisition of Squarespace Inc., the $7.28 billion acquisition of Smartsheet Inc. and the $6.15 billion acquisition of Nuvei Corp. — stood out as examples of venture capital-backed businesses that had gone public over the years only to be taken private again by private equity in 2024.

Voss suggested the trend reflects shifting priorities for public market investors in the wake of the 2022 market reset.

"The public markets [previously had] a growth-at-all-costs business model, and then the sentiment switched and there was a clear bias toward profitability," he said. "It makes sense for them to kind of transfer themselves into the private markets, do that transformation over a period of time, become more profitable and then, probably, ultimately try to go public again."

– Read about record-high PE portfolio company bankruptcies. – Catch up on a ranking of the largest private credit managers globally. – Download a spreadsheet of data from this story.

2025 outlook

Global private equity's substantial stores of dry powder, the expectation of additional interest rate cuts in 2025 and improving investor confidence will drive a "significant increase" in private equity dealmaking this year, accounting and advisory firm PricewaterhouseCoopers LLP predicted in its 2025 outlook report for the asset class.

Witte said EY's outlook was similar. PE fund managers eyeing potential megadeals in the US are "at least hopeful of a regulatory environment that's a little more accommodative for those types of deals" following the November presidential election that returned President Donald Trump to office.

"When we think about tailwinds for activity, especially in the large part of the market, that's certainly something the shops are thinking about," Witte said.

Voss speculated there may be another take-private megadeal on the horizon, a deal similar to this year's private equity-backed acquisitions of Squarespace, Smartsheet and Nuvei. He said other potential targets, potentially much larger than any of those three companies, could use some time out of the public markets to refocus on long-term value creation instead of quarterly performance metrics.

"There is some speculation that there are these iconic publicly-traded companies right now that are in need of a transformation," Voss said.