A stark warning that those waiting for a return to the geopolitical status quo may be waiting forever was one of the key themes to emerge from IQ-EQ Crossroads 2025, the annual flagship event that this year examined the impact of geopolitics and national policies on private markets.
The event kicked off with a thought-provoking keynote session where IQ-EQ’s Deputy Group CEO, John Legrand, sat down with Sir Alex Younger, former Chief of the Secret Intelligence Service (MI6).A panel of private markets specialists then tackled the challenging task of translating today’s volatile geopolitical landscape into concrete investment decisions.
Hosted by IQ-EQ’s Group Chief Commercial Officer Richard Surrency, the panel discussion made one thing abundantly clear: the post-World War II trade architecture, long anchored by U.S. leadership and liberal globalisation, is now unraveling. Trump’s ‘Liberation Day’ tariffs are a watershed moment in the shift from multilateralism to transactionalism, in which trade is used as a lever of geopolitical control. For investors, this demands a fundamental reassessment of supply chains, market exposures, and regulatory risk.
An evolving private equity landscape
Emilio Domingo, Chief Commercial Officer for Bain & Company’s EMEA Private Equity Practice, reflected on how the optimism that marked the beginning of 2025 has slowly dissipated, giving way to a more cautious, even stagnant, outlook as geopolitical uncertainty deepened. “2024 was average in terms of M&A activity and transactions for private equity. There was a lot of hope in 2025 for significantly increased activity… but that has not materialised,” Mr. Domingo noted.
Private equity firms are facing mounting pressure to generate liquidity, as portfolio companies are held for longer periods and exit activity slows. Limited partners (LPs) are expected to demand more decisive action in the months ahead, prompting many investors to reassess their strategies.
Kuwardeep Singh, Co-Head of the EMEA Financial Institutions Group at Nomura International, noted some “decision paralysis” across the investment sector: “There’s a lot of scenario planning… but a reluctance to actually implement any strategies, because you just don’t know what the end state will look like. At the same time…LPs are demanding liquidity.”
Sir Alex cautioned against any “wait and see” approach that could span an indeterminate period. “There is now a fundamental difference in the status quo. It’s about abandoning that idea that the weirder things get, the more likely they are to get back to normal – there’s no law that says that.”
Sectors to watch
While the uncertain environment has led to a temporary pause in new deal-making, it has also sparked renewed focus on asset disposals and finding resilient investment opportunities.
Mr. Domingo pointed out that geopolitical upheaval has also unveiled certain sectors and themes where investors can direct their attention. These include technology and services – especially software, cybersecurity infrastructure, and cloud technologies – which are less impacted by tariffs. The nearshoring of supply chains and defence-related investments also offer promising opportunities in an increasingly volatile world.
Indeed, one of the clearest outcomes of heightened geopolitical tension is the surge in defence spending. Panelists agreed that private equity is already well-integrated into defence supply chains, with growing interest in tier 1 contractors, aerospace, and dual-use military technologies. As governments ramp up military spending, the defence sector stands out as both resilient and poised for long-term growth.
Navigating regulatory complexity
However, Charles Claypoole, a partner at Latham & Watkins specialising in international law, noted the increasing complexity of investing in dual-use defence technologies, such as drones or other advanced hardware that could have both commercial and military applications.
A key distinction in investing in dual-use technologies lies in the differing export control regimes between the U.S. and Europe. Mr. Claypoole explained how, under the U.S. International Traffic in Arms Regulations (ITAR), military-related goods are subject to strict controls that “follow” the product even after it has been exported. For instance, if a U.S.-origin military product is sent to Germany, and later re-exported to a third country like India, U.S. approval would still be required.
This creates additional friction and uncertainty, especially as rising political tensions and potential fractures in transatlantic alliances could further complicate the movement of sensitive technologies. Investors must consider how these regulatory dynamics impact their investment strategies and risk assessments.
The impact of tariffs on domestic manufacturing
Trump’s tariffs are designed to accelerate domestic U.S. manufacturing, fostering a “renaissance” of sorts in key sectors. This builds on the global “re-shoring” momentum that was already picking up in the wake of the Covid-19 pandemic. Investors are already responding, with sectors like infrastructure, logistics, real estate, and automation poised to be direct beneficiaries. Mr. Singh highlighted that while manufacturing will not return to the U.S. and other advanced economies without significant cost, private capital is well-positioned to underwrite the infrastructure required to bring it back.
Europe as another beacon
Overall, Europe is emerging as a region of relative strength. According to panelists, European valuations remain attractive. This is creating more room for deal flow across the UK and continental Europe, particularly in mid-cap transactions, which have historically outperformed during periods of valuation consolidation.
In addition, sectors that are less susceptible to global trade tensions, such as services and automation, are likely to benefit from the large volume of private capital still waiting to be deployed. These sectors, more insulated from tariff impacts, offer compelling investment opportunities as private equity continues to adapt to the new normal.
In summary, private market investors are facing a world that’s unlikely to return to the old status quo. As geopolitics shift from multilateralism to transactionalism, the pressure is on to rethink strategies, not wait things out. Yet within the uncertainty lie opportunities. Sectors like defence, cybersecurity, and automation show resilience, while Europe offers relative stability and value. The message from panelists was clear: adapt decisively, or risk falling behind in a market that’s rapidly redefining the rules.
More from IQ-EQ Crossroads 2025:
- Read our write-up of Sir Alex Younger’s keynote session, where he discussed private markets under ‘might makes right’
- Watch our 2025 highlights video
