As private equity adapts to rate volatility, capital discipline, and a flight to quality, the U.S. middle market has emerged as a case study in strategic resilience.
According to E78’s data from the Mid-Market Private Equity Dashboard, the first half of 2025 was marked by sharp contrasts: early softness gave way to a surprising rally in June, while steady deal closings ran counter to declining overall volumes. Beneath the volatility, a clear narrative emerged: mid-market sponsors are pivoting away from aggressive deployment toward high-conviction, operations-driven investing.
PRIVATE EQUITY INSIGHTS DASHBOARD
PE MID-MARKET DEAL TRACKER
Deal Counts by Sizes – H1
Capital Invested by Industry – H1
Top 10 PE Funds (by size) Closed in H1 2025
Out of the 30 deals recorded in the $250 million to $500 million range, the IT sector led with 10 deals reflecting strong investor interest, followed by B2B and Financial Services with 8 and 5 deals, respectively
Healthcare led the $10 to $100 million deal range with 51 out of 184 disclosed transactions, followed by B2B and IT, with the three sectors together accounting for ~73% of all disclosed deals in this segment
The total funds raised in H1 were close to $235 billion, with the top 10 deals accounting for nearly 50% of the total, highlighting strong inflows and capital concentration among a few large PE fund houses
The total disclosed deal volume was driven largely by transactions between $10 million and $100 million, which made up ~65% of the total, highlighting the strong activity within this mid-sized deal range
In H1 2025, the IT industry remained the top recipient of capital, attracting ~29% of the total, followed by the B2B sector with around 24%, highlighting strong investor interest in tech-driven businesses
Note on Methodology: Deal counts and volumes in this article reflect the most current data available as of mid-July 2025. E78 pulls figures on a rolling basis, consistent with our research provider’s methodology, which incorporates newly disclosed or revised deal information. This approach ensures the highest possible data accuracy and reflects the evolving nature of private equity transaction reporting.
A Tale of Two Halves: Activity Declines Before a June Spike
The first five months of 2025 painted a picture of deliberate slowdown. From January to May:
- Deal volume declined by 25% overall, with the steepest drop occurring in April (−26% MoM), according to E78’s data.
- Average time to close a deal surged by over 50%, from 1.8 months in January to 2.7 months by April.
- Despite these headwinds, deal count remained relatively stable, suggesting that while sponsors were slowing capital deployment, they were not stepping away from the market entirely.
Then came June.
- Total disclosed deal volume rose 73% month-over-month, the largest single-month spike in over a year.
- Closed deals also increased by 8%, marking the first real sign of renewed momentum since Q1.
This sudden shift may reflect growing sponsor confidence amid signs of macroeconomic stabilization, as well as a rebound effect from pent-up deal demand.
June’s data suggests the middle market may have hit an inflection point. Sponsors are beginning to lean back in, but with greater selectivity and operational focus.
The Enduring Strength of the $10M–$100M Deal Range
One of the most consistent themes in E78’s dashboard is the dominance of the $10M to $100M transaction range. Across all six months of 2025:
- This segment accounted for 64–67% of deal volume, signaling that while megadeals may fluctuate with broader markets, the core of private equity remains deeply rooted in the middle market.
That concentration underscores the sector’s role as a stable growth engine—especially for sponsors seeking platforms with scalable operating models.
Dry Powder Builds, But Deployment Slows
Dry powder levels trended upward during the first half of the year, rising 13.3% from January to February alone, and holding steady through May. Yet this capital wasn’t aggressively deployed.
Instead, firms appear to be exercising heightened discipline, possibly in response to:
- Macroeconomic uncertainty around rate policy and inflation
- Extended diligence cycles, as reflected in the 50%+ increase in time to close deals
- Sector rebalancing, with tech remaining dominant but healthcare and business services gaining traction
This mirrors what we’ve described in our earlier article, “Private Equity in 2025: Five Key Levers Driving Value Creation”, where we noted that sponsors are shifting away from purely financial engineering and toward value creation through operational transformation.
Sector Spotlight: Tech Dominates, but Healthcare Holds Steady
Throughout H1 2025, Technology led all sectors in PE investment, capturing:
- 44% of total capital in January
- 40% in February
- And remaining the top recipient through April, even as total volumes fluctuated
Meanwhile, Healthcare consistently accounted for 15–20% of capital deployment, reflecting its resilience in uncertain market conditions. Sponsors appear to be targeting defensible, high-margin assets that align with long-term secular trends—a pattern we’ve seen replicated across our client portfolio.
From Deals to Discipline: The Emerging Mid-Year Thesis
The dominant narrative from E78’s 1H25 data is one of strategic patience.
- Sponsors are not chasing volume—they’re chasing quality.
- Capital is plentiful, but it’s being deployed with surgical precision.
- Deal velocity is slower, but that’s a feature, not a flaw that allows for deeper diligence and better alignment.
These insights reinforce our belief, shared in E78’s ongoing advisory engagements, that operational preparedness is now a differentiator. PE firms and their portfolio companies must be ready to act quickly when high-quality opportunities arise, and to execute transformation programs that unlock real value post-close.
What Comes Next? A Playbook for H2
If June’s uptick holds, the second half of 2025 may be characterized by a more confident but still disciplined deployment environment. The mid-market is well-positioned to lead this phase, with deal sizes that fit the appetite of sponsors, ample dry powder, and an ecosystem hungry for operational partners.
For sponsors, the direction is clear: Don’t just transact—transform. That’s where E78 plays a critical role, helping firms translate capital into sustainable performance across finance, technology, and operations.
As we wrote earlier this year, the firms that win in 2025 won’t just be the ones that close the best deals. They’ll be the ones who know how to strategically execute after the ink dries.
Stay ahead of the middle-market curve.
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