Private Equity's Rising Influence in Global Markets: Strategic Investment in Privately Held Giants as the Next Frontier of Growth

The private equity industry is undergoing a profound transformation, driven by macroeconomic shifts, evolving investor priorities, and the strategic repositioning of capital toward privately held companies. After a challenging 2023 marked by rising interest rates and liquidity constraints, the sector has shown resilience in 2024 and 2025, with a partial recovery in deal activity and a renewed focus on operational value creation. As general partners (GPs) adapt to a higher-for-longer interest rate environment and regulatory scrutiny, the next frontier of growth lies in the strategic investment in privately held giants-companies with the scale, innovation, and operational flexibility to thrive in a fragmented global economy.

A Post-2023 Reset: From Stagnation to Strategic Resilience

The turbulence of 2023 forced private equity firms to confront a $3.2 trillion liquidity gap, as limited partners (LPs) withdrew capital and general partners struggled to exit illiquid assets, according to McKinsey's Global Private Markets Report 2025. This period of retrenchment, however, catalyzed innovation. By 2024, the industry began deploying creative liquidity solutions, including continuation vehicles and public-to-private (P2P) transactions, which surged by 65% in Europe alone, as highlighted in Private Equity Trends in 2025. These tools allowed GPs to extend holding periods while maintaining alignment with LPs' demands for faster returns.

The stabilization of interest rates and inflation in 2024 further spurred a rebound in dealmaking. Global buyout deal value rose by 37% year-over-year to $602 billion in 2024, with average deal sizes hitting a record $849 million, according to Bain & Company's Private Equity Outlook 2025. This recovery was not uniform: North America and Europe led the charge, with deal values increasing by 34% and 54%, respectively, while the Asia-Pacific region lagged due to slower growth in China and Japan (see the Bain & Company report for regional breakdowns).

Strategic Investment in Privately Held Giants: Case Studies in Resilience

The renewed focus on large, privately held companies reflects a shift in private equity's value proposition. Rather than chasing high-growth startups or fragmented markets, GPs are targeting established firms with untapped potential for operational and technological transformation.

One standout example is Hg's $3 billion acquisition of AuditBoard in May 2024, a European software firm specializing in governance, risk, and compliance solutions; this move fits the strategy outlined in The Top Private Equity Firms of 2024. Similarly, Thoma Bravo's continued dominance in the software sector-having invested in over 490 companies since 2000-highlights the appeal of private equity's long-term partnerships with management teams to drive innovation (see The Top Private Equity Firms of 2024 for firm-level detail).

Historical case studies also provide insight. The 2006 acquisition of Dunkin' Brands by Bain Capital and Carlyle Group transformed the coffee and quick-service chain into a global powerhouse through digital innovation and operational modernization, culminating in a successful IPO, as documented in 5 Private Equity Case Studies. Likewise, Blackstone's 2007 acquisition of Hilton Hotels, despite initial setbacks from the financial crisis, demonstrated how strategic interventions-such as cost-cutting and brand revitalization-can unlock value over time (see the DigitalDefynd case studies for more).

Digital Transformation and AI: The New Engines of Value Creation

Private equity's influence extends beyond capital deployment. In 2024, GPs are increasingly positioning themselves as catalysts for digital transformation, particularly in traditionally low-tech sectors like manufacturing and retail. According to Harvard's Unlocking Growth study, PE-backed firms increased IT spending by 13.9% on average, leading to 9.4% faster sales growth and 11.2% higher employee growth compared to peers. These investments are not merely tactical; they are reshaping competitive dynamics.

The integration of AI into investment strategies is another frontier. Firms with in-house tech expertise are leveraging AI to identify undervalued assets, optimize portfolio company operations, and predict market trends, as discussed in the paper Private Equity and Digital Transformation from Harvard Kennedy School. For instance, post-AlexNet breakthroughs in machine learning have prompted GPs to prioritize companies with "AI suitability," aligning their portfolios with future technological trajectories (see the Harvard Kennedy School analysis for methodology).

Investor Priorities and the Road Ahead

As the industry evolves, LPs are demanding more transparency and alignment with their own priorities. The focus has shifted from internal rate of return (IRR) to distributions to paid-in capital (DPI), with investors prioritizing faster returns and liquidity, according to Ocorian's Private Equity 2025. This has accelerated the adoption of secondary markets and continuation vehicles, which now account for a growing share of private equity activity (Ocorian outlines the market mechanics).

Regulatory challenges, particularly in the U.S., remain a wildcard. Potential tariffs and interest rate volatility could disrupt deal dynamics, but GPs are adapting by diversifying capital sources and engaging noninstitutional investors, such as high-net-worth individuals, a trend also discussed in Private Equity Trends in 2025.

Conclusion: A New Era of Strategic Dominance

Private equity's rising influence in global markets is not a fleeting trend but a structural shift. By strategically investing in privately held giants, deploying digital and AI-driven value creation, and innovating fund structures to meet LP demands, GPs are redefining the industry's role in the global economy. While challenges persist-particularly in venture capital and Asia-the long-term outlook remains robust. As McKinsey notes, the sector is poised for a rebound in M&A activity by 2026, driven by founder-owned companies coming to market and a maturing secondary market (see Bain & Company's Private Equity Outlook 2025 for related projections).

For investors, the lesson is clear: the next frontier of growth lies not in chasing the next "hot" sector but in partnering with private equity firms that can transform established companies into engines of sustainable value.