How PE firms drive value creation and shape the future of M&A
By Mohit Mehta, Managing Director of International Business at Translink Corporate Finance US partner, Dinan & Company
Private equity (PE) firms are reshaping the mergers and acquisitions (M&A) landscape, evolving from financial sponsors to active partners in business transformation. By driving operational efficiencies, digital innovation, and strategic growth, PE firms unlock value that traditional buyers often cannot. Their ability to tailor capital structures and manage risk makes them formidable competitors and, often, preferred partners in the M&A space.
This evolution is bolstered by an estimated $2.62 trillion in dry powder as of mid-2024. Combined with easing interest rates, these reserves enable PE firms to pursue opportunities aggressively, even amid economic and geopolitical challenges.
Trends shaping private equity in M&A
Two trends define PE’s growing influence: cross-border transactions and platform strategies. Leveraging global networks, PE firms enter high-growth markets and execute add-on acquisitions to scale and consolidate fragmented industries. This approach has intensified competition, particularly in the middle market, where both PE and strategic buyers vie for high-quality assets.
A focus on technology, healthcare, and industrials sectors has not only driven valuations but also fostered innovation in deal structuring, financing, and growth strategies. PE’s adaptability continues to reshape M&A markets.
Valuation and deal structuring
PE firms prioritise long-term growth, valuing businesses based on EBITDA multiples, cash flow, and return on investment, rather than immediate synergies. Their disciplined approach ensures acquisitions with clear optimisation potential.
Deal structuring by PE firms often includes leveraged buyouts, earnouts, or performance-based incentives to balance risk and align interests. This flexibility accelerates deal execution while offering post-acquisition benefits such as strategic guidance, operational expertise, and growth capital to unlock value.
What attracts private equity investors?
PE firms seek businesses with strong financial performance, scalable models, and growth potential. High EBITDA margins, recurring revenue, and leadership in niche markets make companies attractive, particularly in fragmented industries where roll-up strategies can drive significant value.
To appeal to PE buyers, businesses should demonstrate market expansion, innovation, or operational efficiency, alongside a collaborative management team prepared to execute growth strategies. Companies positioned for buy-and-build strategies, offering synergies with existing portfolios, stand out as prime candidates.
The road ahead for private equity in M&A
In 2025, private equity is set to maintain its momentum in M&A, focusing on healthcare, technology, and industrials while expanding middle-market activity through platform strategies.
Challenges such as heightened regulatory scrutiny and geopolitical risks may impact large-scale and cross-border deals. Yet, private equity’s financial strength and innovative deal-making ensure it remains a transformative force, unlocking value across industries and driving the future of M&A.
Translink Corporate Finance, with over 50 years’ experience and a global team of experts, is your partner to get the deal done. We have a deep understanding of where opportunity exists for PE firms and their prospective targets.