Private equity recovery stalls as deal-making slows and firms shift to operationally-driven strategies
Market shocks widen bid-ask spreads, slowing deal-making, exits, and fundraising in H1 2026, according to Bain & Company
Tech buyout value fell to $12bn in Q2 2026, from $118bn in Q3 2025, after software repricing and uncertainty over AI disruption
GPs shift toward operational value creation, prioritizing faster gains in cash conversion, costs, and workforce efficiency, reports FTI Consulting
June 18, 2026 (Preqin First Close | Preqin News) – Private equity’s recovery has stalled in the first half of 2026, with successive market shocks slowing deal-making, exits, and fundraising, according to Bain & Company’s mid-year private equity report.
After entering the year with improving sentiment, the buyout market was hit by three developments: a repricing in software valuations linked to AI disruption, redemption pressure in private credit funds, and renewed geopolitical volatility, says the consultancy. Together, these factors have widened bid‑ask spreads, dampened deal-making, and reduced exit activity, with only a limited number of high-quality assets transacting.
So, where does that leave private equity over the next six months?
‘Given the growing pressure to buy and sell companies, it wouldn’t take much to unlock a wave of new deal-making in the year’s second half. But a sustained upturn will likely depend on the market finding an equilibrium that lasts more than a quarter or two,’ says the report.
‘There’s no question the fog will lift eventually – it always does,’ it adds.
While a limited number of premium assets continue to transact, overall activity remains subdued. Bain & Company says that although pressure to deploy capital and generate liquidity is building, a sustained recovery will depend on markets finding a more stable balance.
Technology buyouts were particularly affected in H1, with deal value falling sharply following a correction in public software valuations. While private valuations have adjusted more gradually, buyout value fell to $12bn in Q2 2026, from $118bn in Q3 2025, amid deep uncertainty about AI disruption, according to the report.
The muted exit environment continues to add to transaction pressures. While high-quality assets attract buyers, second-tier assets can only transact if sellers are willing to lower valuations or pursue ‘structured liquidity solutions’ such as continuation vehicles.
GP-led continuation vehicles now account for 86% of GP-led secondaries activity, according to investment bank Raymond James’ Private Capital Advisory team. The value of these funds grew from about $33bn in 2020 to $73bn in 2024 globally, states its Exit Without Selling report.
As market conditions remain constrained, private equity firms are increasingly focused on internal value-creation levers. GPs are shifting toward more operationally driven strategies, prioritizing faster value creation and more active portfolio management, according to FTI Consulting’s Private Equity Value Creation Index 2026, a survey of 555 private equity leaders.
Speed is a defining feature of the current market. Across the survey's respondents, GPs report the fastest 12-month time-to-value in cash conversion and working capital (82%), cost structure optimization (73%), and workforce effectiveness (73%).
‘The message for operating partners is this: If your exit narrative leads with “AI-enabled,” you’re selling last year’s story,’ says FTI Consulting. ‘Lead with margins, revenue scalability, and market position – then demonstrate how AI underpins those outcomes.’
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