The Lay of the Land
We’re seeing a shift in the private financial markets this quarter—one that feels less like steady growth, more like recalibration. Expansion-stage exits are coming back into focus, investor strategies are evolving, and liquidity is increasingly a central concern. As macroeconomic uncertainty lingers, participants are adjusting expectations, pacing, and risk tolerance.
Key Themes
Here are the trends that stood out most to me from Deloitte’s latest report:
Exit Value Rebounding, But With Caveats
Expansion-stage exit value is on the upswing in 2025. Manufacturing and AI (including AI-adjacent SaaS businesses) are leading the way. Still, IPOs—even though some marquee successes are shining—have cooled relative to their peaks. The message: there’s interest, but volatility and public-market conditions are tempering enthusiasm. (Deloitte)Investor Behavior Shifting
Dry powder for VCs dropped in 2024, which tells us more capital is being deployed. (Deloitte)
Portfolio valuations remain elevated. That means LPs are increasingly focused on when and how liquidity events will happen. The old maxim “cash is king” feels newly relevant.
Insider rounds (follow-on funding from existing investors) are surging. For expansion stage firms, that signals a preference for backing what’s known vs introducing new risk. (Deloitte)
Liquidity & Exit Pace Lagging Investment Pace
Perhaps the biggest tension point: investments, especially in the expansion stage, are growing faster than exits. Deloitte notes a ratio of 5.7x for expansion-stage investments to exits in the first half of 2025. That discrepancy raises questions about how long dry or illiquid this environment may be for many portfolios. (Deloitte)Geographic & Sector Nuance
Traditional hubs (think New York, Bay Area) still dominate when it comes to exit activity. That’s not a surprise. But secondary cities are tightening their grip in certain verticals—particularly health care and energy. Washington, DC and Baltimore are named as examples. (Deloitte)
Sectors with strong tailwinds: high-value manufacturing, AI, SaaS. These are attracting serious exit interest. However, manufacturing exits seem boosted by a few outlier deals, so we should watch for how representative those are in the aggregate. (Deloitte)
Implications for Investors & Founders
What do these trends mean, in practice?
Founders: If you’re leading an expansion-stage company, your exit strategies may need to be more creative. Traditional IPOs are still possible, but many will look to trade sales, strategic acquirers, or structuring follow-on rounds with insider support.
Investors / LPs: Guard against complacency around valuation inflation. Because valuations remain high, exit multiples may compress when exits do happen (if market sentiment doesn’t fully sync). Maintaining flexibility and choosing contracts that allow for optionality (such as exit rights, secondary markets, etc.) may be wise.
Deal Flow Timing and Pacing: Given the lag in exits vs investments, there may be a build-up of pressure for liquidity. This could push some exits to market sooner than expected, or force restructuring of expectations for what returns will look like.
Geographic Opportunity: Secondary markets—in energy and healthcare particularly—look like fertile ground. If you’re evaluating deal opportunities outside of the core hubs, there’s rising evidence that those may offer differentiated return potential (and perhaps less froth in valuations).
What to Watch Next
To stay sharp, I’m keeping eyes on:
Whether the investment-to-exit ratio begins to close. If that gap remains wide, it could signal bottlenecks in the exit pipeline or down-round risk.
Public market volatility—especially around macroeconomic data, interest rates, inflation, and regulatory developments. Those will continue to influence IPO window strength.
How sectors outside AI/SaaS/manufacturing fare. Are newer sectors starting to break through, or will strength concentrate further in what’s already hot?
The movement of capital into secondary and tertiary cities. Whether infrastructure, regulation, or incentives will make those markets more competitive overall.
Bottom Line
Right now, private markets feel like they’re in a holding pattern of sorts—passionate about forward momentum, but waiting for clear skies before making bold moves. For founders, investors, and dealmakers, the key will be balancing optimism with realism: striving for exit opportunities but preparing for scenarios where liquidity comes on others’ terms.