Deal Momentum, AI Mastery, and Strategic Value Creation

Deal Activity Rebounds with Strategic Focus

After subdued activity in recent years, private equity deal volume and value are rebounding significantly. EY's Private Equity Pulse report shows that private equity entered 2026 with renewed momentum following a strong 2025 rebound marked by 57% rise in deal value and significant recovery in exits. Strategic buyers and secondaries helped unlock long-delayed liquidity while improved macro conditions and stabilized valuations strengthened underwriting confidence.

PwC's private equity outlook indicates that after two years of subdued activity, private equity is beginning to regain footing. Easing interest rates are restoring confidence, narrowing valuation gaps, and supporting gradual return of liquidity. In the first half of 2025, US private equity deal value rose roughly 8% year-over-year, reaching just over $195 billion.

Megadeals and Value Creation Emphasis

According to BDO's private equity predictions, megadeals are re-emerging as sponsors and principal investors pursue opportunities with conviction and clear value creation pathways. The U.S. is on track to complete more than 130 $1B+ PE transactions in 2025,30% increase year-over-year. Deals are shifting from pure financial engineering toward operational transformation.

80% of general partners expect PE acquisitions to increase over the next six months, with 72% expecting exit deals to increase,the highest reading since the survey began. This confidence reflects improved fundamentals, clearer visibility, and greater conviction in recent vintage quality.

AI-Enabled Competitive Differentiation

Artificial intelligence is emerging as a core competitive differentiator across the private equity investment lifecycle. FTI Consulting's PE predictions highlight that firms building robust AI capabilities throughout fund and portfolio company management are gaining strategic advantage. AI applications span deal sourcing, due diligence, fraud detection, portfolio monitoring, and standardized reporting.

Firms leveraging AI across these functions speed up execution and raise decision-making quality. Those integrating AI more deeply into fund and portfolio company strategies will emerge as leading performers in the competitive PE landscape. Partners Group's outlook emphasizes scenario analysis and stress-testing as critical components of AI-enhanced underwriting in 2026's complex landscape.

Secondary Markets and Portfolio Liquidity

Secondary markets are expanding as increasingly important sources of liquidity for managing holding periods and recycling capital. BlackRock's private markets outlook shows more investors using secondaries for liquidity and portfolio management, with attractive opportunities in both growth equity and co-investments.

McKinsey's global private markets report highlights that for the first time since 2015, sponsors' distributions to limited partners exceeded capital contributions. Secondary market expansion provides pressure relief as long-hold portfolio companies await exit opportunities, enabling creative approaches to returning capital while managing LP expectations.

Digital Infrastructure and AI-Driven Investments

Digital infrastructure represents particularly promising investment opportunity. Eighty-eight percent of respondents identify digital infrastructure as one of the most promising growth sources for PE in 2026. Data centers are drawing strong interest as AI adoption drives demand and supports steady cash flow.

BDO's analysis notes that since 2020, private equity has invested $1T+ in IT, including $200B in data centers, semiconductors, and energy infrastructure. Demand for top-tier assets will remain strong in 2026, with firms willing to pay premiums for businesses considered resilient or strategically essential.

Carve-Out Strategy Evolution and Creative Structures

Despite more deal-friendly levels, high valuations and compressed returns have positioned carve-outs as one of the most active deal strategies, a trend continuing into 2026. FTI Consulting's analysis shows value creation has become central to investment strategies, with constrained leverage and extended exit timelines necessitating operational improvements beyond financial engineering.

Purpose-driven carve-outs are increasing, driven by corporate balance-sheet repair, activist pressure, regulatory intervention, and conglomerate breakups responding to profitability pressures. Creative deal structures bridge valuation gaps and reduce risk while enabling deployment in competitive environments.

Regulatory Environment and Cross-Border Considerations

While risks remain, the regulatory environment has become more favorable for dealmaking in 2026. Worldwatch reporting on private equity indicates that 40% of general partners express concerns about potential heightened geopolitical tensions reducing cross-border dealmaking. However, improved tariff clarity and stabilized policies support greater deal certainty.

Fundraising remains under pressure, with global private equity fundraising reaching approximately $700 billion in 2025, down from $724 billion in 2024. However, larger private equity funds continue pulling ahead, with megafunds raising increasingly concentrated shares of available capital, making operational excellence and AI capabilities critical differentiators.

IPO Market Recovery and Portfolio Company Exits

FTI Consulting's predictions suggest that certain marquee names could IPO in 2026 at unprecedented valuations in the vicinity of $100 billion or more. Mega-IPOs could boost market sentiment and encourage broader offerings while providing early-round investors with long-awaited monetization opportunities.

Recent regulatory changes are widening available deal structures, giving firms greater flexibility in creative value realization approaches. Companies utilizing these structures and leveraging recent IPOs as market validation will likely enter public markets successfully.

Conclusion

Private equity in 2026 succeeds through operational discipline, AI mastery, and strategic conviction. Firms aligning investment strategy with operational execution while building scalable, differentiated platforms will unlock maximum value in this increasingly competitive landscape.

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