Private equity returns, deals and exits: What investors should know

PRIVATE equity has navigated a shifting narrative in recent years. The market has become more complex, valuations remain stretched and exits more selective, uncertainty over artificial intelligence disruption and geopolitics add to the pressure.

Yet, experienced private equity managers may continue to find deals, improve businesses, and exit across market cycles.

The key question may not be whether private equity can continue to deliver, but which managers are best positioned to create value in today’s environment.

Alisa Amarosa Wood, Partner at KKR, examines three questions investors often ask about private equity today.

Q: Can private equity continue to outperform?

Yes, but the choice of private equity manager is critical. Over the past 25 years, generally private equity has delivered about 400 to 500 basis points in annualised excess net returns over public equities¹.

KKR believes this relative outperformance is because private equity returns are driven less by market sentiment and more by a manager’s ability to create value over time.

That work can include repositioning a business, growing earnings, improving margins, strengthening talent, expanding growth vectors and pursuing disciplined exits.

The results, however, vary sharply, depending on factors like sourcing capabilities, value creation approach and support resources.

The performance gap between top and bottom quartile private equity managers is over 1,400 basis points, compared to only 300 basis points among public equities².

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KKR’s 2013 acquisition of flow control technology provider Gardner Denver shows how proven value creation toolkits can work in practice.

KKR worked with the company to improve the efficiency and effectiveness of its core product, carried out a transformational merger with Ingersoll Rand and made every employee an owner.

Along with others, these initiatives helped reshape the company into a global leader and increased its value at exit.

The lesson is simple. In private equity, the who matters more than the what. Active ownership, close alignment with management teams, and durable operational improvement efforts can separate the winners and losers.

Q: Are deals getting done?

Industry deployment recovered to just over US$900 billion (S$1.1 trillion) in 2025³, but the number of deals fell as some managers waited on the sidelines. Those with strong sourcing networks, discipline and conviction through complexity continue to deploy.

KKR has a local, relationship-driven sourcing model across its global platform. For example, over the last 50 years, KKR has completed over 70 carveouts.

These complex transactions require managers to spin up standalone businesses by separating non-core assets from large conglomerates, reorganising management teams and building independent systems.

The ability to pursue complex transaction types amidst uncertainty is a hallmark of disciplined managers as it enables continued investing in all market environments.

In fact, KKR aims to invest approximately the same amount of equity year after year. This disciplined deployment approach is designed to help manage deployments and preserve capital for the differentiated opportunities that emerge in uncertain periods.

For investors, the key test is whether deployment reflects differentiated sourcing and discipline versus market momentum.

Q: Can private equity managers still exit investments?

Yes, and demand remains strong for high-quality assets. In 2025, global private equity exits reached their second highest dollar value ever.

However, a small number of transactions worth over US$10 billion drove much of that, while the number of exits declined year over year. Higher financing costs and stagnant valuations have made buyers more selective.

Prospective buyers increasingly favour businesses that can demonstrate strong and sustained earnings growth.

In many cases, this is because the earnings growth needed to support a 2.5 times return over five years has risen from about 5 per cent a year a decade ago to closer to 12 per cent today⁴.

We believe that managers must therefore increase a company’s earnings and value instead of depending on better market conditions.

Generally, KKR seeks to exit after achieving approximately 80 per cent of its value creation plan for a company. It has multiple pathways to exit.

While IPO markets recovered in 2026, they were not reliable over the past few years. Managers who select investments with several monetisation options and build value that attracts buyers enjoy more flexibility regardless of market conditions.

KKR retains flexibility by using three main exit routes roughly evenly split across sales to companies, sales to other private equity firms and listings on public markets.

Private equity may still reward investors, but performance can vary significantly from one manager to another. Discipline, repeatable and proven value creation playbooks, and flexibility around exits separate managers in today’s demanding market.

Read more on private equity returns, deals and exits.

References:

^1,2 Data as of June 30, 2025. Source: Cambridge Associates, KKR Global Macro & Asset Allocation analysis.

You cannot invest directly in an index. Index results assume the re-investment of all dividends and capital gains. There is no assurance that the trends described or depicted above will continue. Past performance is no guarantee of future results.

^3,4 Bain & Company Global Private Equity Report 2026.

Disclaimer: The information herein (including any “forward‐looking statements”) is subject to change, no assurance can be given that actual events or results will reflect any such information. KKR does not make any representation or warranty, express or implied, with respect to such information, and KKR has no obligation to update such information. Investors should keep in mind that the securities markets are volatile and unpredictable. The specific portfolio companies identified are not representative of all of the assets purchased, sold or recommended for advisory clients, and it should not be assumed that portfolio companies identified were or will be profitable. 

© 2026 Kohlberg Kravis Roberts & Co. L.P.