North America’s Private Equity Firms Thrive Amidst Challenges
North America’s Private Equity Sector Demonstrates Resilience
Forvis Mazars, LLP, one of the leading public accounting and consulting firms, recently shared valuable insights regarding the private equity (PE) landscape in North America. Featuring findings from the Global Private Equity Report 2025, the survey collected perspectives from over 300 respondents across multiple regions, showcasing a notable performance of North American PE firms.
Performance Highlights of North American Firms
The report reveals that North American private equity firms have the highest rate of portfolio performance against their expected outcomes. Remarkably, 33% of firms surveyed reported that their performance is “above planned” after three years, marking them as leaders when it comes to internal rate of return (IRR) among the global regions covered. Only Central and Eastern Europe is noted for slightly higher figures, placing North America in a favorable position.
Key Insights on Investment Preferences
Survey results suggest a strong preference for sectors such as financial services, technology, and telecommunications, which appeal to 51% and 47% of investors respectively. Firms emphasize investments in businesses focusing on scalable, recurring revenue models that operate with less dependence on physical assets, paving the way for stable long-term growth.
Investment Strategies and Trends
The data indicates that add-on acquisitions are prevalent, as firms typically prefer consolidation strategies that provide reduced risks. The average size of investments remains under $50 million, reflecting a trend towards manageable and adaptable investment opportunities.
Creating Operational Value
North American firms are at the forefront of creating operational value, with many establishing dedicated value creation teams. Some firms have expanded their operational teams by up to 30% in the past year, highlighting a proactive approach to promote portfolio growth in an uncertain market.
Fundraising Confidence and Market Outlook
A significant 71% of North American respondents expressed a positive outlook regarding fundraising conditions for the coming year, positioning the region ahead of others, with Latin America following at 47%. Their confidence is indicative of a robust market environment that encourages further investment.
Addressing Market Challenges
Despite the optimism, challenges persist. Approximately 60% of private equity professionals identify market evolution as the primary obstacle hindering portfolio performance. Additional concerns include geopolitical uncertainties at 45% and misalignment with management strategies at 37%.
Strategies for Navigating Challenges
Linch noted that to combat these challenges, firms are extending their portfolio holding periods to extract maximum value, enhancing their growth strategies by focusing on digital transformation and integrating environmental, social, and governance (ESG) elements. As the landscape evolves, significant market volatility driven by interest rates and inflation remains a major concern.
A Bright Outlook for 2025
Looking ahead, North American private equity firms are filled with optimism for the year 2025. Their strong confidence contrasts sharply with the more cautious perspectives emerging from Europe, where firms encounter greater geopolitical and regulatory challenges.
“Our North American private equity firms exhibit impressive resilience and adaptability,” Linch emphasized. “This dedication to robust fundamentals and steadfast growth plans enables them to aim for strong returns despite the overarching market challenges.”
About Forvis Mazars
Forvis Mazars, LLP operates as an independent entity within the Forvis Mazars Global network, recognized as one of the foremost accounting firms in the U.S. With a dedicated team of 7,000 professionals, the firm is committed to delivering an Unmatched Client Experience through superior assurance, tax, and consulting services across all 50 states and worldwide. To discover more about Forvis Mazars and their offerings, visit forvismazars.us.
Frequently Asked Questions
What key findings were reported in the Global Private Equity Report 2025?
The report highlighted North America's strong portfolio performance, sector preferences, and optimistic fundraising outlook.
How are North American private equity firms performing compared to other regions?
North American firms reported the highest rates of portfolio performance, only trailing Central and Eastern Europe in IRR metrics.
What investment sectors are currently favored by private equity firms?
Financial services, technology, and telecommunications are the most attractive sectors for investment, prioritizing scalable and recurring revenue models.
What challenges do private equity firms face in the current market?
Market evolution and geopolitical uncertainty are significant challenges impacting portfolio performance, along with management misalignment.
What is the outlook for fundraising in North America?
The outlook is very positive, with 71% of respondents expressing confidence in market conditions for fundraising efforts in 2025.
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