Private equity-led deals surged 54% in value to $1.2 trillion in 2025, up from $783 billion in 2024. After two years of compressed activity driven by high interest rates, a bid-ask spread that kept sellers and buyers apart, and a backlog of unsold portfolio companies, PE is back. For digital business owners, this is the most significant structural shift in the buyer landscape since 2021.
Why PE Went Quiet and Why It Came Back
The 2022 to 2024 period was defined by a structural mismatch. Interest rates rose sharply, increasing the cost of leveraged buyout financing. Sellers, many of whom had received premium valuations in the 2021 bull market, were unwilling to accept lower multiples. PE firms, sitting on large portfolios of companies acquired at peak valuations, were reluctant to sell at a loss. The result was a market in stasis.
Three things broke the deadlock in 2025. First, central banks began cutting rates, reducing the cost of debt financing for LBOs. Second, LP pressure on PE firms to return capital intensified after several years of minimal distributions. Third, the AI-driven revaluation of technology assets created a new basis for deal pricing that allowed buyers and sellers to find common ground on multiples.
"Historically, GPs had sold 30% of their investments by year four, but just 19% of 2021 acquisitions had been sold by 2025." McKinsey Global Private Equity Report 2026.
The Backlog Problem
McKinsey's Global Private Equity Report 2026 identifies a structural overhang that will drive deal activity for the next two to three years. Historically, PE firms sold 30% of their investments by year four. For the 2021 vintage, only 19% had been sold by 2025. This means a significant proportion of PE-owned digital businesses are overdue for exit, and the pressure to return capital to LPs is intensifying.
For digital business owners, this creates an important dynamic: PE firms are simultaneously buyers and sellers. They are deploying new capital into acquisitions while also bringing portfolio companies to market. The result is a more liquid transaction environment with more counterparties on both sides of the table.
Where PE Is Deploying Capital in Digital
Goldman Sachs estimates that PE now accounts for roughly 40% of global M&A activity. Within the digital sector, PE deployment is concentrated in several areas:
| Segment | PE Activity Level | Typical Multiple Range | Key Drivers |
|---|---|---|---|
| Vertical SaaS | Very High | 4x to 8x ARR | Recurring revenue, low churn, AI integration potential |
| Digital Infrastructure | High | 12x to 18x EBITDA | Data centre demand, AI compute requirements |
| Fintech Payments | High | 3x to 6x revenue | Transaction volume growth, regulatory moats |
| iGaming / Online Gambling | Moderate-High | 8x to 14x EBITDA | Regulatory expansion, recurring player revenue |
| Content & Media | Moderate | 6x to 10x EBITDA | IP value, subscription models, audience data |
| Crypto / Blockchain | Selective | Wide range | Regulatory clarity improving, institutional adoption |
The Private Credit Dimension
One of the most significant structural changes in the PE landscape is the rise of private credit as a financing mechanism for digital acquisitions. The private credit market is now valued at roughly $2.1 trillion, according to Goldman Sachs, which expects it to more than double by 2030. Private credit funds are offering flexible, covenant-light financing structures that traditional bank debt cannot match, particularly for acquisitions of digital businesses with intangible asset-heavy balance sheets.
For sellers, this matters because it expands the pool of buyers who can finance an acquisition. A PE firm that might previously have been constrained by bank lending limits can now access private credit to fund a larger transaction. This is particularly relevant for digital businesses in the $20 million to $200 million range, where bank financing has historically been the bottleneck.
Sovereign Wealth as the New PE Anchor
The other structural shift is the increasing role of sovereign wealth funds as lead investors in PE-backed digital acquisitions. Gulf state funds, particularly Saudi Arabia's PIF, Abu Dhabi's Mubadala and ADQ, and Singapore's GIC and Temasek, are no longer acting as passive LP investors. They are co-investing directly, taking anchor positions in PE funds, and in some cases leading transactions independently.
The Electronic Arts take-private, announced in September 2025, is the clearest expression of this trend. PIF, Silver Lake, and Jared Kushner's Affinity Partners are taking EA private in a $55 billion LBO, the largest in history. The SWF involvement transforms the capital structure and risk profile of the deal in ways that traditional PE alone could not achieve.
For digital business owners in gaming, fintech, and blockchain, the implication is that the buyer universe now includes sovereign capital with a multi-decade investment horizon, a lower cost of capital than commercial PE, and a strategic interest in building digital ecosystems rather than simply generating financial returns.
What Sellers Need to Know
The PE comeback creates a more competitive buyer environment, but it also creates new complexity for sellers. Several points are worth noting:
PE buyers move on their own timeline. Unlike strategic acquirers who are driven by competitive urgency, PE firms operate on fund cycle logic. A PE buyer who is in year six of a ten-year fund has different time pressure than one in year two. Understanding where a potential buyer is in their fund cycle is critical to assessing deal certainty and timeline.
Management retention is a PE priority. PE acquirers typically want the founding team or senior management to remain post-acquisition and roll equity into the new structure. Sellers who are planning a full exit need to structure this carefully and ensure the management incentive package is aligned with the PE firm's value creation plan.
Add-on acquisition appetite is high. PE firms are actively using portfolio companies as platforms for add-on acquisitions. If your business is a potential add-on for a PE-backed platform, the valuation conversation is different from a standalone acquisition. Add-on buyers often pay higher multiples because they can realise synergies that a standalone acquirer cannot.
The due diligence bar has risen. After several years of compressed activity, PE firms are being more rigorous in diligence, particularly around customer concentration, churn, AI capability, and regulatory exposure. Sellers who arrive at a process without clean data rooms and clear answers to these questions will lose time and potentially deal value.
The 2026 Outlook for PE in Digital
The backlog of unsold PE portfolio companies, the pressure to return capital to LPs, and the improving financing environment all point to continued high PE activity in 2026. Bain's survey found that 80% of M&A executives expect to sustain or increase deal activity this year. For digital business owners, the window for a PE-backed exit is as wide as it has been since 2021, and the buyer pool is deeper than at any point in the past three years.
The key variable is interest rates. If central banks continue to cut, the cost of LBO financing falls further and PE deal activity accelerates. If rates stabilise or rise, the bid-ask spread will widen again and the window will narrow. Sellers who are ready to move in 2026 should not wait for a better environment that may not materialise.