The Global Private Equity Outlook, an annual report co-published by Dechert and Mergermarket, explores the trends expected to shape the PE industry and how dealmakers are finding creative solutions for growth in uncertain times.
Signs of a Gradual Thaw 2026 Global Private Equity Outlook
Contents
Methodology
2
Foreword
3
Introduction
4
Key findings
6
Deal environment
8
The impact of technology
14
Sector focus
15
Fund trends
20
LP co-investments
23
North America spotlight
24
Private credit
26
EMEA spotlight
30
Alternative liquidity solutions
32
Antitrust and national security
39
Asia-Pacific spotlight
42
Conclusion
44
Key takeaways
45
Methodology In July 2025, Mergermarket , on behalf of Dechert LLP, surveyed 100 senior-level executives at different private equity firms based in North America (45%), EMEA (35%) and Asia-Pacific (20%). In order to qualify for inclusion, the firms all needed to have US$2.5 billion or more in assets under management, and respondents could not be first-time fund managers. The survey included a combination of qualitative and quantitative questions, and all interviews were conducted over the telephone by appointment. Results were analyzed and collated by Mergermarket , and all responses are anonymized and presented in aggregate.
Foreword
Welcome to the eighth edition of Dechert’s Global Private Equity Outlook , a comprehensive annual review of the key trends and themes shaping the global private equity (PE) market. Our research for this year’s edition, produced in association with Mergermarket , provides valuable insights into how PE managers around the world are navigating an increasingly complex and unpredictable deal and fundraising environment. GPs entered 2025 cautiously optimistic that inflation was cooling, interest rates had peaked and after nearly three years of becalmed deal activity and challenging fundraising, pent-up transaction flow could once again be released and the market re-energized. However, significant shifts in U.S. trade policy, political stasis in key European markets and rising geopolitical tensions have quelled some of the industry’s loftier ambitions. Given such a volatile backdrop, the 100 PE firms who generously gave their time to this research have provided invaluable context and insight into where the asset class may be heading in the next 12 months. The survey reveals that GPs believe the market is turning a corner. Buyout and exit values have improved year-on-year, and managers are optimistic about future returns. Though they are under no illusion about the ongoing headwinds, GPs are buoyed by their track record of adaptation and evolution. Indeed, a key strand that runs through this year’s report is that GPs are finding ways to unlock liquidity, whether through smart and pragmatic deal structuring or the use of other alternative liquidity options, fund finance and GP-led secondaries. This is an innovative and sophisticated asset class that continues to find novel ways to solve complex problems and create value for investors. We hope that you find the analysis in this report illuminating, valuable and practical. Despite the challenges, this is a time of innovation and real promise for a PE industry that has proven its ability to navigate market cycles and deliver results for investors. As Dechert celebrates 150 years of helping business leaders lead, we are excited for the future and look forward to helping our PE clients take advantage of the opportunities that the market has to offer in 2026 and beyond.
Markus Bolsinger Co-Head of Private Equity Partner, M&A/Private Equity New York/Munich markus.bolsinger@dechert.com
Sabina Comis Global Managing Partner Partner, Tax/Private Funds Paris sabina.comis@dechert.com
Maria Tan Pedersen Co-Head of Emerging Markets Partner, M&A/Private Equity Singapore maria.pedersen@dechert.com
Nick Tomlinson Partner, M&A/Private Equity London nick.tomlinson@dechert.com
3
Introduction
Number of global buyout deals, 2020–Q3 2025
PE dealmakers faced a challenging macroeconomic backdrop in 2025, but despite tariff volatility and geopolitical uncertainty, buyout value has made double-digit gains year-on-year. Global buyout deal value totaled US$965.8 billion for Q1–Q3 2025, a 30% increase on the US$742.3 billion secured during the first three quarters of 2024. However, buyout dealmaking felt the effects of U.S. Liberation Day tariff announcements at the beginning of April. PE managers retrenched in the second quarter as capital markets around the world digested the impact of new trading arrangements. But activity as measured by deal value rallied strongly in Q3 2025, recording US$415.8 billion worth of transactions to rank as the best quarter for deal value since the bull market of mid-2021. “The environment remains challenging but there are deals to be done. GPs are being more selective about the deals they pursue and are being more creative and thoughtful when structuring those deals to work around valuation gaps,” says Maria Tan Pedersen, co-head of Dechert’s Emerging Markets practice. Interest rate cuts in the UK and Europe and more recently in the U.S., as well as active syndicated loan and private debt markets and the growing pressure on PE firms to deploy US$1.2 trillion of dry powder stockpiles, have helped balance out tariff and geopolitical headwinds and keep buyout deployment on an upward trajectory. Of note, though, the increase in buyout deal value has come despite a decline in deal volume, with the number of buyouts falling from 7,791 over the first nine months of 2024 to 6,961 deals during the same period in 2025. In an uncertain market, buyout firms have focused their efforts on backing large companies with the scale and revenues to ride out short- to mid-term volatility and offer protection against downside risk. The announcement of the US$56.6 billion acquisition of video gaming company Electronic Arts (EA) by a PE consortium including Silver Lake, Affinity Partners and PIF is a clear example of how megadeals have helped boost overall value in 2025. Jumbo transactions have also provided a much-needed boost for exit values, with big-ticket sales to strategic buyers, such as Global Payments’ acquisition of a 55% stake in Worldpay from GTCR and FIS for US$24.25 billion and Insight Partners’ US$5.1 billion sale of software group Dotmatics to Siemens, helping to more than double year-on- year exit value.
12,000
2,390
10,000
2,366
2,209
2,909
8,000
2,520
2,525
2,205
6,000
2,188
2,298
2,962
4,000
2,688
2,577
2,367
1,644
2,169
1,148 723 961
2,000
3,584
2,578
2,547
2,406
2,092
0
2020
2021
2022
2023
2024
2025
Q1
Q2 Q3 Q4
Value of global buyout deals, 2020–Q3 2025
1,800
1,600
ș398.9
1,400
1,200
ș433.6
1,000
ș152.2
ș289.3
800
ș196.0
ș415.8
ș226.8
600
ș299.9
ș461.5
ș326.8
ș233.7
ș264.0
ș175.4
400
ș162.8 ș99.5 ș141.6
ș269.4
ș159.0
200
ș361.9
ș356.2
ș286.0
ș173.1
ș162.7
0
2020
2021
2022
2023
2024
2025
Q1
Q2 Q3 Q4
4
distributions by managers relative to each dollar invested by LPs, has become a key factor for LPs when deciding whether to reinvest in a manager. Actual cash distributions have become more important than paper returns. The increase in exit and buyout deal value so far in 2025 is a positive sign that the industry may be turning a corner and moving into a position to speed up the realization of liquidity. The use of continuation funds has also helped to drive stronger DPI (see Alternative liquidity solutions, page 32). However, macroeconomic complexity indicates that this will be a gradual unwinding, with deal activity recovering incrementally, as opposed to the deal deluge that stakeholders had been hoping for at the start of 2025. “Looking forward, I expect that deal activity will continue to increase, but it will be a gentle thaw rather than everyone jumping in at the same time,” says Markus Bolsinger, co-head of Dechert’s PE practice. PE sponsors will also continue to orchestrate liquidity events using alternatives to traditional exit pathways. “Even though there is still lingering market uncertainty, the PE market will be active, with GP-led deals, secondaries transactions and continuation fund vehicles complementing M&A and IPOs,” says Comis. There is still a great deal of work to be done, but with a bigger transactional toolbox at its disposal, and a mainstream M&A market that is defrosting, the industry is moving back in the right direction.
“It does feel like the deal markets across key jurisdictions are getting back on track,” says London-based Dechert partner Nick Tomlinson. “After a strong start to 2025, buyouts did take pause to digest U.S. tariff announcements, but deal processes are back underway, and I would expect to see deal announcements rise through the rest of 2025 and into 2026.” Work to be done Increases in buyout and exit value in the context of an unpredictable global economy are a testament to PE’s resilience and ingenuity, but dealmakers will not be complacent about the volume of work still required to bring the industry back into balance. Rising interest rates and market dislocation have made it difficult to exit companies and have also slowed deployment. GPs still have to offload 29,000 unsold portfolio companies worth an estimated US$3.6 trillion, according to Bain & Company figures. On the deployment side, the clock is ticking for managers to put US$1.2 trillion of dry powder to work, especially given that close to a quarter of this capital is aging and has been available for investment for more than four years. “The single biggest issue facing PE funds is liquidity,” says Sabina Comis, global co-managing partner of Dechert. “If funds don’t manage to exit deals, they don’t give money back to their investors, and those investors don’t reinvest in successor funds. The liquidity cycle is stalling.” Indeed, LPs are so focused on liquidity that the Distributed to Paid-In Capital (DPI) metric, which tracks the actual
5
Key findings This year’s report reveals an industry that is cautiously optimistic despite an uncertain and volatile macroeconomic and geopolitical backdrop, with returns on the rise and creative deal structures to the fore.
49% Geopolitical uncertainty Just under half of respondents cite geopolitical conflicts as a broad macroeconomic factor that is expected to have one of the biggest influences on the deal environment over the coming 12-18 months. At a regional level, however, 65% of EMEA executives see them as one of the main challenges to dealmaking, compared to only 30% of APAC respondents. 48% Valuations Nearly half of GPs favor earnouts to help close valuation gaps. In APAC, that number rises to 60%.
17.1% Returns GPs are more optimistic about the returns outlook for the industry than a year ago. For 2025, EMEA and North American respondents estimate returns of 17.1%, while APAC respondents estimate the figure to be slightly higher at 17.4%. 75% Sector preferences Three-quarters of survey participants expect to invest in life sciences (including healthcare) over the next 24 months. Almost as many (74%) state that they will invest in technology. 64% Fundraising Almost two-thirds of respondents are expanding into additional investment strategies to mitigate fundraising pressures.
52% Co-investment Just over half of respondents have a co-investment program, with 51% across all regions offering their LPs co-investment opportunities in private credit loans obtained by portfolio companies.
6
46% GP-led secondaries Almost half of respondents are utilizing GP-led secondaries or continuation vehicles (CVs) to facilitate DPI for existing LPs and mitigate potential fundraising challenges in the absence of traditional asset selloffs – almost double the number of respondents than in last year’s survey. 47% Antitrust issues
77% GP-stake divestitures More than three-quarters of survey participants plan to make a GP-stake divestiture in the next 24 months – double the proportion that had these plans a year ago.
73% Democratization of PE Almost three-quarters of respondents expect at least 10% of their next fund to come from retail investors.
Nearly half of survey participants expect a negative impact from the “politicization” of merger control enforcement. 57% Private credit
36% Fund finance Just over one-third of respondents expect fund finance to increase in the next 12-18 months. One year ago, only 2% anticipated an increase.
Over half of GPs are using private credit for refinancing and recaps at the portfolio level, making it the most common use case among respondents.
7
Deal environment
Survey findings show that GPs are grappling with a complex and unpredictable deal environment. Geopolitical conflict is cited by almost half (49%) of all respondents as a broad macroeconomic factor expected to have one of the biggest influences on the deal environment over the coming 12 to 18 months. “Deal opportunities might be low due to geopolitical conflicts, and we will have to avoid investing in countries that are affected by these,” a North American-based respondent says. “Geopolitics is definitely top of mind on almost all of our deals,” Bolsinger says. “No company will be totally immune to geopolitical change, and GPs are putting in significant amounts of work on tariffs, supply chain and cross-border risk.” EMEA respondents, who are more exposed to risk from the Ukraine and Middle East conflicts, are particularly sensitive to world events, with 65% expecting geopolitical conflicts to shape the future deal environment. Only 30% of APAC-based respondents, however, cite geopolitical conflict as a top deal risk, with relatively weak economic growth a far bigger concern for GPs from the region. The relatively low number of APAC respondents with particular concern for geopolitical risk is somewhat surprising given tense relations between China and the U.S. For North American GPs, meanwhile, supply chain disruption is chosen by the most respondents, reflecting the impact sudden shifts in U.S. cross-border trade and the implementation of higher tariff barriers have had on dealmaking. Sector challenges In terms of industry-specific challenges, 60% of respondents say stabilizing portfolio company costs is one of the biggest issues currently facing the PE asset class. The availability and cost of leverage is also a major concern, according to a majority (58%) of respondents, particularly those based in North America (67%). “The cost of leverage is high, particularly when PE firms are looking to invest in companies in the higher risk category,” a North American GP says. “Risk exposure will have to be carefully selected in order to get funds at a reasonable cost.” Cost leverage will vary according to sector, with businesses in high-performance industries, such as technology, in a position to negotiate better pricing when raising financing.
No company will be totally immune to geopolitical change, and GPs are putting in significant amounts of work on tariffs, supply chain and cross-border risk. Markus Bolsinger Dechert LLP
8
In your estimation, which broad macroeconomic or geopolitical factors will have the biggest influence on the deal environment over the coming 12-18 months? (Select top three)
Which of the following do you see as the biggest industry- specific challenges currently facing the private equity industry? (Select top three)
GȃopoliticǸl conflicts
StǸbilizinȌ portfolio compǸny costs
49%
60%
30%
55%
65%
59%
44%
62%
Supply chǸin disruption
AvǸilǸbility Ǹnd cost of lȃvȃrǸȌȃ
45%
58%
40%
42%
60%
50%
46%
67%
SustǸinǸbility/ESG fǸctors in businȃss
41% 40%
Cybȃrsȃcurity risks
35% 35%
58%
29%
26%
WȃǸk ȃconomic Ȍrowth
42%
37%
50%
GǸp in vǸluǸtion ȃxpȃctǸtions
34%
33%
33%
35%
26%
Nȃw tȃchnoloȌy Ǹdoption includinȌ AI
38%
32%
40%
LocǸl currȃncy risks
17%
40%
32%
40%
TǸriff wǸrs/trǸdȃ sǸnctions
38%
30%
24%
35%
22%
Borrowȃr loominȌ mǸturity wǸlls in 2026
34%
30% 30%
IncrȃǸsȃd rȃȌulǸtory scrutiny
30%
40%
25%
22%
35%
29%
Prȃssurȃ to rȃturn cǸpitǸl to LPs
30%
Intȃrȃst rǸtȃ Ǹdjustmȃnts
25%
27%
42%
20%
18%
22%
37%
TȃchnoloȌicǸl disruption includinȌ AI
Lowȃr corporǸtȃ Ǹnd/or CǸpitǸl GǸins TǸx rǸtȃs
22%
9%
20%
20%
23% 23%
9%
4%
TotǸl
AsiǸ-PǸcific
EMEA
North AmȃricǸ
9
PE returns: optimistic expectations For all the challenges and uncertainty that GPs have to navigate, the survey findings reveal that respondents remain confident of delivering returns in the mid-to-high teens, with GPs generally more sanguine about return prospects than a year ago. Asked to forecast net returns in 2025 for the PE industry as a whole, EMEA and North American respondents estimate an average of 17.1%, while APAC respondents expect an average of 17.4%. Interestingly, survey respondents expect slightly lower returns for their own funds. APAC and EMEA respondents each estimate their funds will deliver net returns for 2025 of 16.5% on average, and North American respondents estimate net returns of 16.8%. Overall, respondents’ estimates for net returns are more optimistic than one year ago, with predictions for their own funds up from an average of 15.8% to 16.6%, and predictions for average net returns for the industry as a whole up from 16.5% to 17.1%. “The expectation of a 17% net return implies a 2.4-2.6 gross multiple on invested capital across a five-to-six-year period. That might be ambitious for deals done at high entry valuations at the peak of the market in 2020 and 2021, but is realistic for deals in 2023, 2024 and 2025, given the entry multiples and the financing mix and value-creation playbooks that PE sponsors have refined,” Bolsinger says.
What do you estimate the net return for 2025 to be for your fund and the PE industry? (%) Means shown
TotǸl
16.6
17.1
AsiǸ-PǸcific
16.5
17.4
EMEA
16.5
17.1
North AmȃricǸ
16.8
17.1
16.0 16.2 16.4 16.6 16.8 17.0 17.2 17.4 17.6
Your fund (%)
Thȃ PE industry (%)
10
Bridging the valuation gap Even though sentiment around expected returns is improving, several GPs still expect gaps between the valuation expectations of sellers and buyers to remain a feature of M&A negotiations. “Sellers will have to define the potential buyer universe more clearly and processes will require more creativity from buyers and sellers to bridge valuation gaps,” Bolsinger says. “The gap in valuation expectations has been present for a few years now,” an EMEA respondent says. “The future perception of buyers and sellers has been very different and has been affected by unreasonable financial projections of sellers.” An APAC GP adds: “Given the increase in market volatility, I think that the decision-makers have been largely uncertain about valuations, and the valuation discussion between parties is lengthy.” Overall, 38% believe the valuation gap will widen compared to 30% who feel it will narrow. Nearly half (48%) of EMEA respondents expect valuation gaps to widen over the coming 12 to 18 months.
“GPs active in Europe are not at a point where they absolutely have to sell, and they will not sell at any price just to get a deal done,” Tomlinson says. “If an asset can’t be sold at a GP’s target valuation and has to be held for an extended period, CVs and similar structures provide GPs with more optionality.” APAC and North American respondents, however, are notably more undecided on the issue. Among North American respondents, 38% expect the valuation gap to remain the same over the next 12 to 18 months.
GPs active in Europe are not at a point where they absolutely have to sell, and they will not sell at any price just to get a deal done. Nick Tomlinson Dechert LLP
Do you expect valuation gaps to narrow or widen over the coming 12-18 months?
10%
28%
32%
22%
8%
TotǸl
AsiǸ-PǸcific
15%
25%
25%
20%
15%
EMEA
17%
31%
29%
17%
6%
North AmȃricǸ
2%
27%
38%
27%
6%
Widȃn siȌnificǸntly
Widȃn sliȌhtly to modȃrǸtȃly
StǸy thȃ sǸmȃ
NǸrrow sliȌhtly to modȃrǸtȃly
NǸrrow siȌnificǸntly
11
Earnouts on the up Indeed, the survey findings show GPs are using a variety of structuring tools to facilitate alignment on value between buyers and sellers. Earnouts are one of the most favored strategies for 48% of respondents, rising to 60% for those in the APAC region. Meanwhile, North American respondents more commonly turn to leveraging high/low deal competition (51%) and aligning financial metrics and assumptions with their buyer/ seller (45%). Dechert’s team also sees managers making use of seller contingent considerations, seller notes and deferred consideration to bring buyers and sellers together. For EMEA respondents, on the other hand, allowing flexibility in the deal’s structure is found to be one of the most effective strategies in helping to close the gap, as stated by 54% of this group. “In the APAC region for example, market valuation gaps, particularly in the mid-market, continue to persist. These gaps can prolong negotiations, but GPs are finding ways to work around the delta between buyers and sellers with clever structuring to bridge the gap,” Pedersen says. “Sellers in North America are not willing to take a haircut on valuation yet,” Bolsinger adds. “Buyers recognize that and will structure around the seller’s requirements to reach a price where sellers will be prepared to transact.” However, structuring deals creatively—in a more flexible or non-traditional manner—takes time and requires a shift in expectations when it comes to deal execution. In the current environment, sellers have to adapt auction process strategies and take a more curated approach to buyer selection. “The detailed structuring required to bridge valuation gaps suggests that fewer broad auction processes will get done. There will be more bilateral processes that are very targeted at hand-picked buyers and offer buyers more time. I think we could also see some pre-emptions and more club deals, but the crowded auctions of the past will be rare,” Bolsinger says.
Which strategies does your organization find most effective in helping to close valuations gaps? (Select top three)
EǸrnouts
48%
60%
51%
40%
DȃǸl structurȃ flȃxibility
46%
50%
54%
38%
AliȌninȌ finǸnciǸl mȃtrics Ǹnd Ǹssumptions with thȃ buyȃr/sȃllȃr
44%
40%
46%
45%
LȃvȃrǸȌinȌ hiȌh/low dȃǸl compȃtition
43%
35%
37%
51%
DȃlǸy closinȌ or stǸggȃrinȌ pǸymȃnts (i.ȃ., to Ǹllow mǸrkȃt conditions Ǹnd/or businȃss pȃrformǸncȃ to improvȃ)
39%
40%
32%
43%
LȃvȃrǸȌinȌ IP with unrȃǸlizȃd rȃvȃnuȃ potȃntiǸl
32%
20%
29%
40%
Rollovȃr ȃquity
28%
35%
34%
20%
In the APAC region market valuation gaps, particularly in the mid-market, continue to persist. Maria Tan Pedersen Dechert LLP
Sȃllȃr finǸncinȌ
20% 20%
17%
23%
TotǸl
AsiǸ-PǸcific
EMEA
North AmȃricǸ
12
What is your maximum hold period for a portfolio company with which you (and your investors) are comfortable? (Select one)
60%
50%
50%
47%
45%
45%
42%
42%
40%
40%
40%
30%
20%
17%
11%
11%
10%
5%
3%
2%
0%
0%
0%
10 yȃǸrs
15 yȃǸrs
Morȃ thǸn 15 yȃǸrs
VǸriȃs ǸccordinȌ to thȃ mǸnǸȌȃmȃnt fȃȃ for thȃ undȃrlyinȌ fund
TotǸl
AsiǸ-PǸcific
EMEA
North AmȃricǸ
Extended hold periods Slow exit activity has seen GPs hold onto portfolio companies for longer, with analysis from Private Equity Info putting the average hold period for PE-backed companies at 5.8 years, the longest average since 2000. In a large majority of cases, respondents’ maximum hold period for a portfolio company with which they and their investors are comfortable is either 10 years (45%) or 15 years (42%), further underscoring how the industry is growing accustomed to extended hold periods. “The fund life cycle is undoubtedly becoming longer, and the standard LP investment timeframe is stretching out. The growth in the CV market (see Alternative liquidity solutions, page 32), which provides different structures for GPs to retain their exposure to trophy assets, is a further sign of this,” says Comis.
The fund life cycle is undoubtedly becoming longer, and the standard LP investment timeframe is stretching out. Sabina Comis Dechert LLP
13
The impact of technology
Which of the following technologies will have the biggest effect on the private equity industry in the next 12 to 18 months? (Select top two)
Technology is not only having a direct influence on the selection and execution of PE deals, but also on the way PE managers run their own operations. As the PE industry has matured and grown assets under management (AUM), so has the regulatory spotlight brightened and investor expectations grown for more frequent and detailed investor reporting. This has recalibrated the demands on the operational models of firms, who have had to upgrade their technology stacks and back-office resources to keep up with higher compliance obligations and investor demands. Technology is also transforming the way managers invest and structure their core front-office operations, with firms now effectively using AI tools to parse deal flow, identify the best deal targets and expedite deal execution. It comes as no surprise, then, that GP survey respondents agree that technology is affecting both how firms are run internally and how they invest. A plurality of respondents overall (45%) agree that AI is one of the technologies which will have the biggest impact on the PE industry in the next 12 to 18 months, including half of APAC respondents (50%) and 47% of North American respondents. EMEA respondents more commonly point to potential impacts of cybersecurity (46%).
ArtificiǸl intȃlliȌȃncȃ (AI)
45%
50%
40%
47%
Cybȃrsȃcurity
36%
30%
46%
31%
Businȃss intȃlliȌȃncȃ Ǹnd dǸtǸ ǸnǸlytics
28%
20%
23%
36%
AutomǸtion/Robotics
27%
30%
31%
22%
Entȃrprisȃ/loȌistics softwǸrȃ
23%
30%
6%
33%
Cloud tȃchnoloȌy
20%
25%
28%
11%
Thȃ Intȃrnȃt of ThinȌs
16%
5%
20%
18%
45% of respondents agree that AI is one of the technologies which will have the biggest impact on the PE industry in the next 12 to 18 months.
BlockchǸin
5%
10%
6%
2%
EMEA
North AmȃricǸ
TotǸl
AsiǸ-PǸcific
14
Sector focus
Managers can refine sector expertise in different ways.
In a market where competition for fundraising is fierce, it has become essential for GPs to differentiate their propositions to LPs. Sector specialization has been a pathway to delivering this differentiation. Over half (55%) of respondents note that their investors have a preference for specialized strategies. In EMEA and North America, 57% and 58% of respondents, respectively, find that their investors prefer their investment strategy to be specialized, with 45% of APAC respondents recognizing a preference for such strategies. Preqin research, meanwhile, shows that sector specialist funds have made more distributions to LPs over time. Sector specialist funds in the 2012-2015 vintages posted median DPI ratios of 136.7%, versus median DPI of 130% for generalist vehicles. For 2016-2019 vintages, sector specialist DPI was more than 7% above generalist fund DPI. In a liquidity-constrained market, the cash-on-cash outperformance of sector specialist vehicles has been a key point of difference.
“Mid-market firms will focus on a handful of verticals. Their chosen verticals will be where they have the track record and the deal professionals with experience and networks,” Tomlinson says. “Large-cap managers will typically have different sector pods across their platforms and will raise multiple funds dedicated to specific sectors. We see large- cap managers consistently broadening their offerings across sectors, and the market is at a point where the LP would probably expect to have that choice.” Sector specialization is not only important for fundraising, but also for differentiating a dealmaker’s proposition to prospective target companies and management teams. “The sector specialism track is evident. As a GP, you don’t want to spread yourself too thinly and appear too generalist. A focus on two or three priority sectors provides a dealmaker with a repeatable edge and an ability to build an engine for steady deal flow,” Pedersen says. “A manager with proprietary sector insights, an understanding of the sector- specific regulatory climate and an operator network will have an edge in deal sourcing and deal processes.”
15
Which of the following sectors do you expect your organization to be invested in over the next 24 months? (Select all that apply)
75%
Lifȃ sciȃncȃs & hȃǸlthcǸrȃ
22%
74%
TȃchnoloȌy
22%
60%
Consumȃr
11%
58%
Businȃss sȃrvicȃs
16%
47%
IndustriǸls
9%
42%
FinǸnciǸl sȃrvicȃs
8%
41%
ArtificiǸl IntȃlliȌȃncȃ
0%
29%
MǸnufǸcturinȌ
2%
24%
Food & bȃvȃrǸȌȃ
1%
19%
EnȃrȌy
6%
16%
InfrǸstructurȃ
2%
14%
LoȌistics
1%
12%
TȃlȃcommunicǸtions
0%
10%
DȃcǸrbonizǸtion
0%
8%
EducǸtion
0%
5%
MȃdiǸ
0%
4%
Dȃfȃnsȃ
0%
4%
Sports
0%
All thǸt Ǹpply
Most importǸnt
Hot sectors: where GPs are focused The survey findings show that respondents are homing in on priority sectors and are well-versed in the specific dynamics and challenges that come with investing in their chosen industries. Life sciences (including healthcare) and technology are each expected to be invested in by approximately three- quarters of survey participants over the next 24 months, with each of these two sectors also selected by 22% of GPs (the highest scoring categories for GPs) as their most important sectors. This should come as no surprise given the underlying demand and growth in these industries.
75% Sector preferences Three-quarters of survey participants expect to invest in life sciences (including healthcare) over the next 24 months. Almost as many (74%) state that they will invest in technology.
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Tech control Technology has been a go-to industry for the buyout sector for years now, with GPs drawn to investments in business- critical software with sticky customer bases and recurring, subscription-based revenue streams. The roll-out of AI- powered applications across all industries provides additional long-term tailwinds for technology buyouts, with McKinsey forecasting that data center capacity, to keep pace with accelerating AI demand, will have to grow at a compound annual growth rate of 27% between 2023 and 2030. Of the respondents that plan to invest in technology, software and big data analytics are the most popular subsectors, targeted by 92% and 82% of respondents, respectively. Cybersecurity and AI are each being targeted by seven in ten respondents planning to invest in technology. While global trade is expected to have a significant impact on those investing in technology, both artificial intelligence (88%) and/or cybersecurity, privacy, data risks and regulations (86%) are the key macro-trends which are expected to have the greatest impact on investment theses/strategies.
92% of respondents that plan to invest in technology in the next 24 months say they will target the software subsector.
[If Technology selected] Which of the following technology subsectors are you planning to invest in? (Select all that apply)
[If Technology selected] Which macro-trends are having the greatest impact on your investment thesis and/or investment strategy regarding technology businesses? (Select up to three)
SoftwǸrȃ
92%
ArtificiǸl intȃlliȌȃncȃ
BiȌ dǸtǸ ǸnǸlytics
88%
82%
Cybȃrsȃcurity
Cybȃrsȃcurity, privǸcy Ǹnd dǸtǸ risks Ǹnd rȃȌulǸtions
72%
86%
ArtificiǸl IntȃlliȌȃncȃ (AI)
70%
GlobǸl trǸdȃ
58%
Industry-spȃcific tȃch (ȃ.Ȍ. fintȃch, Insurtȃch, hȃǸlthcǸrȃ tȃch)
55%
Anti-trust Ǹnd FDI considȃrǸtions (forȃiȌn, fȃdȃrǸl Ǹnd stǸtȃ, ȃ.Ȍ., ownȃrship disclosurȃs)
E-commȃrcȃ
39%
51%
Robotic ǸutomǸtion
RȃȌulǸtory considȃrǸtions (Ǹsidȃ from thosȃ prȃviously mȃntionȃd)
45%
11%
Sȃmiconductors
9%
FrǸud Ǹnd Ǹbusȃ ȃnforcȃmȃnt (ȃ.Ȍ., FǸlsȃ ClǸims Act)
HǸrdwǸrȃ
5%
5%
BlockchǸin
4%
Gov Tȃch
4%
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Healthy returns The life sciences and healthcare sector, meanwhile, has delivered consistent deal flow over time. Big pharma companies have regularly turned to M&A to fill their drug pipelines and push back patent cliffs, presenting buyout investors with a reliable channel for exits. PE will continue investing in healthcare and healthcare-adjacent businesses due to demand growth driven by aging populations and chronic diseases; resilient payer-backed cash flows; and fragmented markets that present attractive opportunities to create efficiencies and better patient experience. In tech- enabled lower-cost care settings and biopharma services, there are opportunities for investors to scale platforms, drive operational efficiencies, and capture value despite heightened regulatory and reimbursement scrutiny. PE firms have also jumped at newer opportunities to invest in certain life sciences services companies. Contract development and manufacturing organizations (CDMOs), which provide drug development and manufacturing services to pharmaceutical companies on a contract basis, provide one example of a market segment that has attracted significant buyout investment. The diversity of drivers in the sector is demonstrated in two of the deals in which Dechert had an advisory role. In August, PE health specialist ARCHIMED announced a carve-out of ARK Diagnostics, which valued the target at US$428 million; and, three months later, Morgan Stanley Capital Partners (MSCP) sold Clarity Software Solutions, a provider of health plan member communication services, to health experience and insights company mPulse. Healthcare and life sciences also continue to present a broad range of assets into which PE can lean. Of those expecting to invest in the sector, three-quarters are planning to invest in its industry-specific technologies and care service lines, while 71% are planning to invest in biomed/genetics. Home health, home care, and hospice also remain in the sights of a majority of respondents (57%), even with U.S. federal reimbursement uncertainties at present. From a long list of macro-trends, 57% of respondents planning to invest in the life sciences and healthcare sector point to issues surrounding global trade as having a top- three significant impact on their industry-specific investment thesis and business strategies. This is in addition to the macro-trends associated with unmet patient needs and value-based care and alternative reimbursement models, each selected by 48% of respondents. Concierge medicine (e.g., wellness, innovation, private/cash-pay patient care), a first-time survey choice, was selected by 41% of respondents as a top-three macro-trend for this sector. As the population ages, this sector could prove very attractive for PE managers in the coming years.
[If Life sciences & healthcare selected] Which of the following healthcare subsectors are you considering/planning to invest in? (Select all that apply)
HȃǸlth IT/HȃǸlth Tȃch/AI in hȃǸlthcǸrȃ
76%
Biomȃd/Ȍȃnȃtics
71%
Homȃ hȃǸlth, homȃ cǸrȃ, Ǹnd hospicȃ
57%
PhǸrmǸ sȃrvicȃs (includinȌ spȃciǸlty phǸrmǸ)
51%
MȃdicǸl instrumȃnts/products/dȃvicȃs
48%
HospitǸls Ǹnd hȃǸlth systȃms/clinics (ȃ.Ȍ., ASCs, urȌȃnt cǸrȃ)
45%
OutpǸtiȃnt cǸrȃ (ȃ.Ȍ., ȃyȃ cǸrȃ, ENT, orǸl surȌȃry, pǸin mǸnǸȌȃmȃnt, primǸry cǸrȃ, dȃrmǸtoloȌy, cǸrdioloȌy, uroloȌy, ȌǸstroȃntȃroloȌy, OB-GYN)
44%
RȃtǸil hȃǸlthcǸrȃ
24%
BȃhǸviorǸl hȃǸlth Ǹnd disǸbility sȃrvicȃs (i.ȃ., I/DD sȃrvicȃs, Ǹutism sȃrvicȃs)
17%
DȃntǸl cǸrȃ
15%
VȃtȃrinǸry sȃrvicȃs
4%
Rȃvȃnuȃ cyclȃ mǸnǸȌȃmȃnt
1%
TȃlȃhȃǸlth
1%
[If Life sciences & healthcare selected] Which macro-trends are having the greatest impact on your investment thesis and/ or investment strategy regarding healthcare and healthcare- adjacent businesses? (Select up to three)
GlobǸl trǸdȃ
57%
VǸluȃ-bǸsȃd cǸrȃ Ǹnd ǸltȃrnǸtivȃ rȃimbursȃmȃnt modȃls
48%
Unmȃt pǸtiȃnt nȃȃds
48%
ConciȃrȌȃ mȃdicinȃ (ȃ.Ȍ., wȃllnȃss, innovǸtion, privǸtȃ/cǸsh-pǸy pǸtiȃnt cǸrȃ)
41%
ArtificiǸl intȃlliȌȃncȃ/tȃch-drivȃn Ȍrowth
37%
PǸyor rȃimbursȃmȃnt (ȃ.Ȍ., CMS, third-pǸrty pǸyors)
31%
Cybȃrsȃcurity, privǸcy Ǹnd hȃǸlth dǸtǸ dȃvȃlopmȃnts
17%
Anti-trust considȃrǸtions (fȃdȃrǸl Ǹnd stǸtȃ (ȃ.Ȍ., mini-HSR lǸws, ownȃrship disclosurȃs))
7%
RȃȌulǸtory considȃrǸtions (Ǹsidȃ from thosȃ prȃviously mȃntionȃd)
5%
FrǸud Ǹnd Ǹbusȃ ȃnforcȃmȃnt (ȃ.Ȍ., StǸrk LǸw, Anti-KickbǸck StǸtutȃ, FǸlsȃ ClǸims Act)
0%
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Financial services interest The financial services sector is another area that remains on the respondents’ radars. Financial services has been a steady performer for PE firms, with buyout deal value in the sector increasing in each of the last two years. Most financial services M&A is still focused on acquiring niche managers or funds outside the manager’s typical strategy, which they can use to build out new areas without the expense of hiring new teams. Wealth management, specialty finance, fund administration and insurance brokerage businesses have presented attractive buy-and-build opportunities for managers; investment in fintech and digital payments has also proved successful. These financial services deal trends look set to continue animating the market in 2026 and beyond. Of those planning to invest in the financial services sector, the top subsectors being targeted are investment brokerages (74%), payment processing (69%), private credit investment management (57%) and rental/leasing/real estate finance (50%).
In terms of macro-trends affecting the market, 88% of respondents believe credit market changes will be one of the most impactful. The only other macro-trend highlighted by a majority of respondents is AI and technology-driven growth, selected by just over half of respondents (55%). Interest in services businesses also continues to grow, with PE firms turning their focus to accounting, fund administration, specialty finance and other similar financial services businesses in recent years. Accountancy services have been a particularly active area, as seen with New Mountain Capital investing in Grant Thornton and Moss Adams’ strategic merger with Baker Tilly, which created the sixth-largest advisory CPA firm in the U.S. Dechert served as advisor on both of these deals, putting the firm very much at the forefront of this emerging trend.
[If Financial services selected] Which macro-trends are having the greatest impact on your investment thesis and/or investment strategy regarding financial services businesses? (Select up to three)
[If Financial services selected] Which of the following financial services subsectors are you planning to invest in? (Select all that apply)
Invȃstmȃnt brokȃrǸȌȃ/brokȃr dȃǸlȃr/plǸcȃmȃnt ǸȌȃnt
74%
Crȃdit mǸrkȃt chǸnȌȃs
PǸymȃnt procȃssinȌ
88%
69%
ArtificiǸl intȃlliȌȃncȃ/tȃch-drivȃn Ȍrowth
PrivǸtȃ crȃdit invȃstmȃnt mǸnǸȌȃmȃnt
55%
57%
Cybȃrsȃcurity, privǸcy Ǹnd dǸtǸ risks Ǹnd rȃȌulǸtions
RȃntǸl Ǹnd lȃǸsinȌ/rȃǸl ȃstǸtȃ finǸncȃ
50%
38%
WȃǸlth mǸnǸȌȃmȃnt
GlobǸl trǸdȃ
45%
38%
InsurǸncȃ-rȃlǸtȃd
43%
FrǸud Ǹnd Ǹbusȃ ȃnforcȃmȃnt
31%
Principlȃ finǸncȃ
33%
Antitrust considȃrǸtions (forȃiȌn, fȃdȃrǸl Ǹnd stǸtȃ (ȃ.Ȍ., ownȃrship disclosurȃs))
FinǸnciǸl sȃrvicȃs ǸdministrǸtivȃ/sub-ǸdministrǸtivȃ sȃrvicȃs
19%
19%
RȃȌulǸtory considȃrǸtions (Ǹsidȃ from thosȃ prȃviously mȃntionȃd)
Invȃstmȃnt bǸnkinȌ
17%
19%
Equity invȃstmȃnt mǸnǸȌȃmȃnt (includinȌ privǸtȃ ȃquity/vȃnturȃ cǸpitǸl)
14%
RȃtǸil bǸnkinȌ
14%
RȃǸl ȃstǸtȃ invȃstmȃnt mǸnǸȌȃmȃnt
10%
RȃȌistȃrȃd invȃstmȃnt product options
10%
Invȃstmȃnt profȃssionǸl lift outs/Ǹcqui-hirȃs
2%
19
Fund trends
“Fundraising headwinds are really driven by exit shortfalls and LPs want to see distributions before recommitting. At the same time, we see some trimming of exposure to APAC, with allocations to countries like China reducing. Everyone is trying to find their safe spot in a situation of uncertainty, and that can lead to prolonged fundraising processes,” Pedersen says. Multi-strategy plays to mitigate fundraising dip When it comes to the strategic approach to mitigating fundraising challenges, 64% of respondents are expanding into different investment strategies, slightly up from the 59% that said they were doing this one year ago. The drive to diversify strategy is most prominent with EMEA respondents (74% compared to 57% one year ago). “If you only have exposure to a vanilla PE strategy, then raising new capital is going to be challenging, but if you also run a debt or infrastructure strategy then you should be stronger and better placed to fight the headwinds,” Comis says. An investment platform that offers investments in different asset classes can help GPs raise capital by presenting LPs with a wider variety of investment opportunities, which in turn offer a mix of risk-adjusted returns. Presenting a range of strategies can help smooth out fundraising volatility, as LPs pivot between different asset classes during economic cycles. The advantages of running multiple strategies have been evident so far in 2025. Unlike PE fundraising, private debt fundraising has proven robust during the first half of 2025, coming in well ahead of H1 2023 and H1 2024 figures, according to Private Debt Investor . Infrastructure fundraising has also increased through the first half of the year, with capital raised in H1 2025 already greater than the full year total for 2024, according to Infrastructure Investor . Managers already running a mix of strategies have reaped the benefits of diversification. “If you look at the very profitable firms over the past 10 years, they’ve become platforms running various strategies, and their funds under management have become bigger and bigger precisely as a result,” Comis says. “Adding a strategy, however, is complicated. You have to hire a team with the right track record and be able to articulate a new investment story to LPs.” We expect that consolidation in private capital will persist into 2026 as asset managers seek scale to offset fee pressure and provide broader access to private markets across distribution
The tough environment for portfolio company exits, and resulting lack of distributions to LPs from their existing funds, has continued to weigh heavily on sponsors’ ability to raise new funds. Preqin figures show fundraising dropping to a seven-year low during the 12-month period ending June 2025. In such a challenging market, the survey shows that GPs are facing a range of obstacles when bringing new funds to market. Fee pressure is the most commonly highlighted global fundraising obstacle, selected by 45% of survey participants as a top-three challenge. “GPs are under more pressure to manage LP expectations, mainly when it concerns the fee structure. Fee pressure is on the rise, especially with new assets and diversification requirements increasing further,” one respondent says. In a competitive fundraising market, managers are seeking to gain an edge by enticing LPs with reduced management fees, generous first-close discounts and more fee-free co-investment optionality. Bain & Company estimates that since the 2008 credit crunch, average net management fees have halved. GPs are having to strike a delicate balance between reducing fees to build fundraising momentum, while keeping fee income at a sufficient level to fund their day-to-day operations. Comis adds that GPs seeking to raise more capital from non-institutional markets, where there is greater sensitivity to fees, could also be a factor. The survey findings also reveal that GPs have to tread a fine line on environmental, social and governance (ESG) and diversity, equity and inclusivity (DEI) issues when raising capital from U.S. and European institutions, given the divergence in such policies between the two geographies. Some 47% of North American and 46% of EMEA respondents cited this as a top-three obstacle. “Europe and the U.S. are not on the same page when it comes to ESG. The regulatory differences are apparent, with Europe tightening the regulatory requirements. It’s difficult to bridge this gap,” a U.S.-based dealmaker says. Perceptions of fundraising obstacles, however, vary by jurisdiction, with APAC respondents more concerned about the negative market perception surrounding a slower fundraising process and the challenges in convincing investors that capital will be put to work quickly. Each factor was identified by 45% of APAC respondents.
20
What is the biggest global fundraising challenge your firm has faced? (Select up to three)
Fȃȃ prȃssurȃ
45%
55%
43%
42%
BǸlǸncinȌ thȃ ȌǸp bȃtwȃȃn Europȃ Ǹnd thȃ U.S. on D&I Ǹnd ESG
44%
35%
46%
47%
Thȃ nȃȌǸtivȃ mǸrkȃt pȃrcȃption of Ǹ slowȃr fundrǸisinȌ procȃss
39%
45%
35%
38%
LǸck of distributions from prior funds
33%
40%
32%
31%
ConvincinȌ invȃstors thȃir cǸpitǸl will bȃ put to work quickly
29%
45%
32%
20%
CompȃtinȌ ǸȌǸinst thȃ lǸrȌȃst Ǹnd/or morȃ divȃrsifiȃd GPs
25%
20% 20%
31%
ChǸnȌinȌ risk Ǹppȃtitȃ by LPs (such Ǹs for ȃmȃrȌinȌ jurisdictions or minority stǸkȃs)
21%
5%
29%
22%
LPs sȃȃkinȌ products thǸt offȃr morȃ liquidity thǸn trǸditionǸl closȃd-ȃnd funds typicǸlly offȃr
15%
10%
26%
8%
SȃcurinȌ smǸllȃr commitmȃnts (undȃr USș100m) from lǸrȌȃ institutionǸl invȃstors
14%
15%
11%
16%
LǸrȌȃ LPs concȃntrǸtinȌ thȃir invȃstmȃnt rȃlǸtionships on Ǹ smǸllȃr numbȃr of funds
12%
5%
11%
16%
Currȃnt “ovȃrǸllocǸtion” to PE by LPs
12%
20%
6%
13%
LP skȃpticism surroundinȌ vǸluǸtions Ǹnd hȃǸlth of prȃ-pǸndȃmic invȃstmȃnts
11%
5%
9%
16%
TotǸl
AsiǸ-PǸcific
EMEA
North AmȃricǸ
21
As a relatively illiquid asset class, characterized by high investment minimums and long hold periods, PE has not always been a natural fit for smaller, retail investors. The potential for non-institutional capital to turbocharge PE fundraising, however, is immense. According to the Allianz Global Wealth Report 2025 , private households hold €269 trillion (US$316 trillion) of financial assets, yet only a small percentage of this personal wealth is invested in private capital, with non-institutional allocations much smaller than those made by institutional investors. Even unlocking a relatively small slice of the retail market would have a meaningful impact on private markets’ AUM. PE managers have been working hard to adapt new structures, such as semi-liquid and evergreen funds, which dovetail more neatly with retail investors’ preferences. Regulatory developments are also opening up opportunities to tap into the non-institutional investor base, with the EU’s ELTIF 2.0 structure and the signing of an executive order in the U.S. advising federal agencies to make it easier for 401(k) plans to invest in alternative assets, putting the foundations in place to support an acceleration of the democratization trend. “Regulation has paved the way for GPs to raise money from non-institutional investors, but it is not an easy lever to pull because of the back-office resource it requires to manage a much higher number of smaller investors,” Comis says. “Smaller managers will have to work with partners in insurance and private banking to reach this capital base.”
channels. There will be a continued focus on diversification into different asset classes, (such as secondaries, private credit, venture and fund-of-funds), different and evolving structures (such as hybrid and evergreen funds) and different distribution channels (such as private wealth). LPs are moving toward fewer, multi-strategy relationships that provide access to co- investment opportunities and other access to private markets. These dynamics are propelling acquisitions of specialist firms, with Dechert having a key advisory role in several such deals. These include Goldman Sachs’ recently announced pending acquisition of Industry Ventures, a leader in venture and growth fund-of-funds, secondaries and co-investments, which further diversifies Goldman Sachs’ US$540 billion alternatives investment platform; and Barings’ acquisition of Artemis Real Estate Partners, a US$11+ billion real estate investment firm, which strengthens Barings’ position in the U.S. real estate market and accelerates the platform’s long-term growth by combining the firms’ complementary investment capabilities and expertise. Private markets democratization drive The survey also highlights the growing influence of the non- institutional investor base when it comes to fundraising. A majority of respondents expect between 10% and 25% of their next fund to come from retail investors, with optimism around the potential of opening up PE to the retail investor especially high in Asia, with more than a third of APAC- based respondents expecting more than 25% of their next fund to come from a retail investor base. The growth in the non-institutional market could provide a timely boost for fundraising at a time when the core institutional investor market has cooled.
What percentage of your next fund do you expect to come from retail investors?
70%
60%
58%
60%
56%
50%
45%
40%
35%
31%
27%
30%
26%
20%
17%
20%
14%
11%
10%
0%
Lȃss thǸn 10%
Bȃtwȃȃn 10% Ǹnd 25%
Ovȃr 25%
EMEA
North AmȃricǸ
TotǸl
AsiǸ-PǸcific
22
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