To the average private equity firm, struggling with volatile dealmaking and a difficult fundraising environment, last year might not have felt much like the boom times of 2021. But statistically, there were similarities, especially for the largest PE sponsors.
The median US buyout deal was done at an enterprise-value-to-EBITDA multiple of 12.5x in 2025, matching the record level seen in 2021, according to data from StepStone Group’s SPI database, included earlier this month in PitchBook’s Q2 2026 US PE Breakdown.
This rich multiple was driven by the largest deals. Last year, US companies with an enterprise value of $1 billion or more were acquired by PE firms at a median EV/EBITDA multiple of 16x, compared with 10.8x for businesses valued under $1 billion, the data shows.
Sign up for The Daily Pitch newsletter Subscribe
The prospect of a pro-business economic agenda under President Donald Trump, more lax antitrust enforcement and an expected drop in borrowing costs gave sponsors the confidence to go big, according to Garrett Hinds, senior PE analyst at PitchBook.
They bet that “stronger GDP growth would fuel value creation and that they could refinance within a year or two, adding leverage back at more attractive rates,” he said.
The largest companies were also acquired with more debt: 5.7X net debt/EBITDA for $1 billion-plus businesses, versus 4X for smaller ones, StepStone found.
A significant difference between 2025 and 2021 is how much of their own money sponsors are putting into deals. In 2025, the equity/EBITDA ratio on US buyout deals was 7.8x, the highest level recorded since 2015. Between 2015 and 2025, debt in US PE deals has gone from being roughly half of a company’s purchase price to just a third.
Equity checks as a proportion of EBITDA for $1 billion-plus deals have more than doubled over the same 10-year period, from 4.4x to 10.3x.
“In 2021, buyers paid up because money was nearly free,” Hinds said. “In 2025, they paid up despite rates that were far higher, and they funded the difference with equity rather than debt.”
But a combination of high energy prices and the re-emergence of inflation fears means that 2026 is unlikely to be a repeat of 2025, he added.
This article originally appeared on PitchBook News
Source: Yahoo Finance