Private Equity in 2025: Market Shifts, Strategy, and the Rise of AI

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Mar 31, 2025

Hugh MacArthur, Chairman of Global Private Equity Practice at Bain & Company, shares insights from his 30 years in private equity. He discusses the shift from traditional financing to tech-driven strategies in deal-making. Hugh highlights the evolving role of AI and data analytics in enhancing decision-making. The conversation also covers adapting to rising interest rates and the importance of sourcing and value creation. He emphasizes demographic trends that shape investment opportunities and the need for transparency between general and limited partners.

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ANECDOTE

Early Challenges in PE Consulting

In the early days of PE consulting, many GPs questioned the need for consultants in deal-making.
Hugh MacArthur recalls having to explain the value of external insights to skeptical clients.

INSIGHT

Shift from Value to Growth

The private equity industry has shifted from a value-oriented approach to a growth-focused one, largely due to technology.
This change has implications for valuation, sourcing, and deal structuring.

INSIGHT

Sources of Value Creation

A study by Bain revealed that half of the value created in buyout deals from 2013-2023 came from revenue growth, half from multiple expansion, and none from margin expansion.
This highlights the shift in focus from cost-cutting to top-line growth.

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Hugh MacArthur, Chairman of Global Private Equity Practice, Bain & Company

In this episode of M&A Science, Hugh MacArthur joins us to discuss the evolution of private equity over the last three decades—from the early days of deal-making and bespoke financing to today's hyper-competitive, tech-driven landscape.

Hugh shares how Bain's private equity practice scaled from an entrepreneurial idea to one-third of the firm's global business and dives into what differentiates top-performing firms. We explore sourcing strategies, value levers, post-acquisition success, and how PE firms are adapting to rising interest rates and new technologies like AI.

Things you will learn:

How Bain & Company built and scaled its private equity practice from scratch
The shift from margin improvement to growth-oriented value creation strategies
How private equity firms are evolving sourcing and financing models
The future of deal execution using AI and specialized data tools

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Episode Chapters:

[00:01:30] – Hugh's background and the founding of Bain's PE practice

[00:03:00] – Evolution from buyouts to a broad private assets approach

[00:04:30] – Bain's entrepreneurial origins in private equity

[00:07:00] – Commercial due diligence: Bain's unique differentiator

[00:12:30] – Market valuation trends and EBITDA multiples over 30 years

[00:14:30] – Industry sector evolution: from industrials to tech and healthcare

[00:20:00] – The impact of software and growth on value creation

[00:22:30] – Changes in deal sourcing: proprietary to competitive

[00:24:30] – Rise of private credit and changes in deal structuring

[00:29:30] – Value creation strategies: growth vs. cost-cutting

[00:33:00] – Buy-and-build strategies and integration challenges

[00:55:00] – Role of AI and advanced analytics in deal execution

[01:00:00] – Growth of private markets and increased retail access

[01:04:00] – Common mistakes PE firms make during acquisitions