Private Equity Pulse: key takeaways from Q2 2026

PE deployment remains selective with AI disruption reshaping underwriting as sponsors rotate toward resilient assets.

In brief

• PE activity moderated slightly in the first half of 2026: While tech-focused transactions fell 50% versus a year ago, non-tech deals rose 9%.
• Exit activity remained steady in the first half, with announced exit value up 9% versus H1 2025 as trade sales continue to anchor the market.
• Firms are optimistic on the outlook – 72% of GPs say they expect deployment activity to increase over the next six months, while 56% expect exits to meaningfully accelerate.
  

Private equity (PE) activity moderated slightly in the first half of 2026 as sponsors remained highly selective in an uncertain market. Globally, PE acquisitions fell 10% in H1 2026 versus H1 2025, while aggregate deal value remained roughly flat.

Overall deployment remains more resilient than the headline figures imply, as the decline was driven disproportionately by a reset in the software space. Indeed, while the value of tech-focused transactions fell 50% versus a year ago, non-tech deals rose 9% over the same period. Rather than stepping back from the market altogether, sponsors are applying a higher bar to sectors where underwriting risk has increased, particularly in areas where AI disruption is reshaping assumptions around growth, pricing power and long-term defensibility.

Data centers in particular have garnered significant attention as compelling opportunities and active deployment areas; however, they’re only one component of a broader AI infrastructure opportunity set. Sponsors are increasingly looking across the enabling ecosystem required to support AI adoption, from grid and transmission capacity and power generation to cooling technologies, software and semiconductors. The result is a widening set of investable themes tied not only to AI demand itself, but also to the physical, digital and energy infrastructure required to support its continued growth.

Trade sales continue to anchor a stable exit market

Exit activity remained steady in the first half, with announced exit value up 9% versus H1 2025. Trade sales continued to anchor the market, extending a theme that has been evident for the last 18 months with corporate acquirors re-emerging as an important source of liquidity for PE-backed assets. In a typical quarter, trade sales have accounted for roughly two-thirds of exit value, with the balance split between sponsor-to-sponsor transactions and IPOs. Over the last six months, that share edged higher to 71%, as corporate acquirors pursued transformational M&A opportunities and looked to PE-backed companies as a source of scaled, high-quality assets.

The survey data suggest this steadier exit environment is being supported in some measure by greater pragmatism among sellers with respect to pricing. In aggregate, 90% of GPs indicated they would accept some level of discount relative to their original underwriting in exchange for immediate liquidity on a long-held asset, with the most common response falling in the 6%–10% range. A notable minority indicated they would accept a larger discount, underscoring the pressure on firms to generate distributions after an extended period of slower realizations.

Greater willingness to accept a discount does not mean the valuation gap has disappeared. Valuation-related considerations remain the primary impediment to liquidity, with 36% of GPs citing unmet underwriting expectations and 12% citing market pricing below carrying value. A limited buyer universe and business readiness followed at 18% and 14%, respectively.

Firms focus on exit readiness, automation and margins

With the intense focus on liquidity, it’s perhaps not a surprise that two-thirds of GPs reported they’re more focused on exit readiness than usual. Multiple headwinds, inclusive of geopolitical shocks, highly volatile equity markets and the interest rate environment are combining to make valuations and exit pathways more complex and less predictable. For sponsors, this means working closely with portfolio companies well ahead of a potential exit to enhance data readiness, tighten reporting and refresh the equity story.

That optimism is emerging in a market that is becoming more actionable, even as underwriting remains disciplined. While valuation mismatches, interest rates and geopolitical considerations remain important watchpoints, with roughly seven in 10 respondents identifying each as at least somewhat of a headwind, they’re offset by expected increases in assets coming to market from both PE owners and corporates, as well as an accommodative financing market and new opportunities in the infrastructure, tools and business models that will support the next phase of AI adoption.

The last 18 months have been defined by a succession of idiosyncratic events and rapidly changing conditions, in which transaction windows have opened and closed quickly. Yet periods of elevated volatility can also generate some of PE’s most compelling long-term opportunities. Firms that can combine flexibility with discipline — moving decisively where conviction is high while maintaining a rigorous underwriting bar — will be those best positioned to capitalize on opportunities in resilient sectors and assets with defensible long-term value creation potential.