As the IPO market remains sluggish, many startups are turning to mergers and acquisitions for exits. While sales to strategic buyers are still common, private equity (PE) firms are increasingly becoming major acquirers—especially in the face of ongoing market turbulence.

In the past five years, PE firms have spent over $56 billion buying private, venture-backed companies with publicly disclosed prices. Since most deals don’t report a price, the actual total is likely far higher.

PE Deals Hold Steady in 2025

So far in 2025, there’s been no slowdown. PE firms have announced 22 acquisitions of venture-funded private companies this year. Of those, three deals alone totaled $8.3 billion in disclosed value.

This includes the largest reported deal in over five years: Clearlake Capital’s majority stake in healthcare software firm ModMed for $5.3 billion. Founded in 2010, ModMed had raised over $385 million in funding and recently focused on using AI to improve its services for medical practices.

The second-largest deal was Bain Capital’s $2.6 billion acquisition of HealthEdge in April. Though HealthEdge was founded in 2004, it raised nearly $100 million in venture funding before being acquired by Blackstone in 2020.

Late-Stage Startups Attract PE Buyers

Private equity typically targets companies with strong revenue and mature operations. As a result, most acquisitions involve startups that are later-stage rather than early-stage.

Recent examples include:

• AuditBoard, an auditing automation platform founded in 2014, acquired by Hg for $3 billion.
• Nasuni, a cloud storage company founded in 2009, bought by Vista Equity Partners for $1.2 billion.

Younger startups, especially those in seed stages, are less likely to be acquired by PE firms. These companies are more often bought by strategic players within the same industry who are interested in the technology rather than immediate revenue.

Market Turbulence Brings Mixed Signals

Looking ahead, there are reasons both for optimism and caution regarding future PE activity amid ongoing market turbulence.

On the downside, publicly traded PE firms like Blackstone, KKR, and Apollo have seen their stock prices drop significantly—around one-third off their recent highs. This reflects growing investor skepticism about the profitability of large-scale acquisitions.

However, there’s no shortage of acquisition targets. In the U.S. alone, there are over 700 private, venture-backed companies valued at $1 billion or more at their last reported funding round. Many of these businesses raised large amounts during the market peak four years ago, and while valuations have since declined, many remain strong candidates for acquisition—particularly outside overheated sectors like generative AI.