Private Equity Acquisitions in the Current Market Landscape

As the IPO market continues to face challenges, many startups have shifted their focus toward mergers and acquisitions (M&A) as a viable exit strategy. While strategic buyers typically dominate this space, private equity (PE) firms are emerging as significant acquirers of venture-backed companies.

Investment Trends in Private Equity

Over the last five years, private equity firms have invested more than $56 billion in acquiring private, venture-backed businesses, according to data from Crunchbase. Although only a fifth of these transactions report their purchase prices, it is likely that the total value is much higher.

This year is on track to continue the trend, with 22 reported acquisitions of seed- or venture-backed firms. Notably, three deals have disclosed prices totaling approximately $8.3 billion.

Highlights from Recent Acquisitions

Among the notable transactions in 2025, the largest disclosed deal involved healthcare software platform ModMed, which sold a majority stake to Clearlake Capital Group for $5.3 billion in March. Although ModMed was founded in 2010 and is no longer a startup, it had garnered over $385 million in funding, including venture rounds and an investment from Warburg Pincus. The company is now emphasizing AI innovations for automating medical practice solutions.

The second-largest acquisition came in April when HealthEdge was sold to Bain Capital for $2.6 billion. Established in 2004, HealthEdge offers software solutions for health plans and previously raised around $98 million before its sale to Blackstone Group in 2020.

The Nature of Startup Exits

Private equity firms generally prefer to acquire companies with established operations and robust revenue streams. This trend indicates that startups involved in these transactions are typically in a later stage of their business lifecycle.

Recent significant deals include:

• AuditBoard: An auditing automation platform founded in 2014, acquired by Hg for $3 billion.
• Nasuni: A cloud storage provider established in 2009, which was sold to Vista Equity Partners for $1.2 billion in July.

Future Outlook on Private Equity Acquisitions

The potential for increased PE acquisitions of venture-backed companies presents both challenges and opportunities. Recently, publicly traded private equity firms like Blackstone, KKR, The Carlyle Group, and Apollo have faced declines in their stock values, down about a third from their peaks earlier in the year. This trend may signal a cautious outlook among investors regarding profitability from acquisitions.

Contrarily, the supply of later-stage companies available for acquisition remains robust. Crunchbase data indicates that there are currently 789 private, venture-backed companies in the U.S. valued at or above $1 billion from their last reported figures. Many of these companies raised funding during the market highs of four years ago and have since seen valuations stabilize, making them attractive targets for private equity acquisition.

Conclusion

In the context of a sluggish IPO market, private equity firms appear well-positioned to continue their role as vital acquirers of mature startups. With a wealth of later-stage companies available and ongoing interest from PE firms, the landscape for startup exits may evolve favorably in the near future.