Financial executives and strategists are increasingly optimistic about 2025, driven by the strength of private credit markets, improving U.S. economic conditions, and a rebound in M&A activity, especially within private equity and asset management.
Private credit has emerged as a crucial growth engine for capital markets. The global assets under management (AUM) for private credit reached nearly $2 trillion in 2024 and is forecasted to surpass $3 trillion by 2028. This growth is fueled by a surge in refinancing needs, strong demand from private equity sponsors, and a desire for more flexible capital structures. Direct lending continues to dominate, but asset-based lending and specialty finance are also gaining ground. Institutional investors like asset managers and insurance companies are increasing allocations to private credit, while retail demand is growing through ETFs and interval funds.
Moody’s has noted reduced default risk and improved macroeconomic stability as driving factors behind the asset class’s expansion. At the same time, firms like Wellington and Dechert have pointed to rising retail interest and a convergence between public and private capital markets as key trends broadening demand for credit investments beyond traditional institutional channels.
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M&A activity is also picking up after a relatively subdued period. U.S. M&A volume rose more than 25% in 2024, and projections for 2025 remain strong. Financial services firm Apollo has tied this momentum to resurgent economic growth and more favorable regulatory conditions. With significant dry powder on hand, private equity sponsors are under increasing pressure to deploy capital. This is expected to further accelerate dealmaking, particularly as large transactions and public-to-private takeovers continue to gain traction.
Data from JPMorgan shows a 27% year-over-year increase in global M&A volume for the first half of 2025, totaling $2.2 trillion. This reflects renewed investor confidence and a willingness to engage in larger, strategic transactions across industries.
Private credit’s rise is also tightly linked to the M&A rebound. With banks continuing to pull back from some lending activities, private lenders have filled the void, offering custom solutions that span the capital structure. This has made private credit an essential enabler of both mid-sized and large leveraged buyouts. Private lenders are now routinely providing senior debt, NAV loans, and even participating in risk transfer arrangements—products traditionally dominated by large banks.
Corporate momentum further supports the positive financial outlook. Blackstone, for instance, reported a 25% year-over-year rise in distributable earnings for Q2 2025, largely driven by credit and insurance growth. Its credit platform now manages more than $400 billion and has seen a marked increase in IPO activity compared to the prior year. Similarly, Brookfield Credit deployed $7.7 billion in the final quarter of 2024 and plans to double its $317 billion credit portfolio within five years, with asset-based finance playing a critical role in its growth strategy. Moelis, a prominent investment bank, posted a 38% increase in second-quarter revenue and is scaling up its private capital advisory business following a strategic hiring push.
The strategic implications of these developments are substantial. Companies are using private credit to restructure pandemic-era liabilities, refinance legacy debt, and fund acquisitions with tailored financing solutions. Lower interest rates and clearer regulatory frameworks are creating a favorable environment for these moves, with analysts characterizing 2025 as a potentially ideal landscape for dealmaking and strategic investment.
Alternative segments of private credit—such as CLO equity, NAV lending, and hybrid capital—are also reshaping how capital is allocated. These innovations are particularly relevant for high-growth companies and sectors benefiting from artificial intelligence and digital infrastructure trends.
While macroeconomic risks and competitive pressures persist, most financial analysts agree that the synchronized rise in private credit and M&A points to a resilient financial ecosystem. Many believe that 2025 could provide a “Goldilocks” scenario for financial leaders—where interest rates are manageable, growth is steady, and market participants are well-positioned to capitalize on both liquidity and expansion opportunities.
For CFOs, investment managers, and capital markets professionals, the coming year is shaping up to be one of strategic deployment, value creation, and a focus on long-term financial resilience.
