The State of Private Equity in 2026: Deal Flow, Dry Powder and What Comes Next
Global private equity deal value reached $2.21 trillion in 2025, a 22.9% increase year over year and the second highest level on record according to PitchBook. The United States alone accounted for $1.16 trillion of that total, a 30.8% increase from 2024. Deal count rose a more modest 6.1% globally, which tells a clear story: sponsors are making fewer, larger, higher conviction bets.
KPMG's Pulse of Private Equity report confirmed this trajectory. Global PE investment rose from $1.8 trillion in 2024 to $2.1 trillion in 2025 while deal volume actually fell from 20,836 to 19,093. The Americas attracted $1.2 trillion, more than half of all global PE capital, across just 9,118 deals.
EY's Q4 2025 PE Pulse reported deal value up 57% year over year and deal volume up 15%, with 40% of GPs expecting deals executed in 2025 to outperform those from the peak years of 2021 and 2022.
The market is active. It is also becoming more selective. Firms without a clear thesis and rigorous diligence process will struggle to compete for quality assets.
Dry powder refers to uninvested capital that has been committed to private equity funds by limited partners but has not yet been deployed into deals. Global dry powder levels remain substantial. According to PwC, US based PE funds held approximately $880 billion in dry powder as of September 2025, down from a record $1.3 trillion in December 2024. That decline is not a concern. It is a signal that capital is being put to work.
However, $880 billion still represents an enormous amount of uninvested capital that needs to find a home. Combined with global dry powder exceeding $2.5 trillion according to Wipfli, competition for quality assets is intense. The firms that will win in 2026 are those with proprietary deal flow, deep sector expertise and operational capabilities that go beyond financial engineering.
Exit markets were the industry's central challenge for the past three years. That is changing.
PitchBook data shows exit value climbed to $1.35 trillion in 2025, a 50.3% year over year increase. KPMG reported global PE exit value reached $1.2 trillion, the second highest level in more than a decade. US exit value specifically jumped 92% from 2024.
The critical detail is that exit volume dropped to a five year low of approximately 3,162 globally. That is concerning given the massive inventory of aging assets. More than 9,000 active portfolio companies across technology, industrials and consumer sectors in North America alone have been held for more than four years. 63% of all active portfolio companies have exceeded a four year holding period.
IPOs. The $7.2 billion Medline IPO, the largest listing of 2025, signaled that public markets are reopening. PitchBook and other analysts forecast approximately 68 IPOs in 2026, which would represent a 44.7% increase over 2025.
Secondary Transactions. This is the most significant structural shift. Ardian closed its record breaking $30 billion Secondary Fund IX, the largest PE fund closed in 2025 across all strategies. Secondary SPVs increased 682% from 2023 and capital raised through secondary vehicles increased 1,340% year to date. Secondaries will likely remain the dominant exit route in 2026.
Continuation Vehicles. GP led continuation vehicles are growing in volume, allowing sponsors to hold onto high performing assets while providing partial liquidity to LPs. Quality is uneven and disciplined evaluation is required.
Technology leads global buyouts, accounting for nearly a third of deal value. AI related transactions are expected to continue growing their share in 2026.
EY's trend analysis shows PE firms rotating toward three primary sectors: technology, industrials driven by supply chain reshoring and automation, and insurance driven by predictable cash flows and distribution opportunities. Within technology, the sub segments seeing the most activity are business intelligence and process automation, HR and workforce management software, and healthcare software.
PE has invested over $1 trillion in IT since 2020, including $200 billion specifically in data centers, semiconductors and energy infrastructure. As AI adoption accelerates, demand for these foundational assets will intensify.
For LPs evaluating fund commitments. Fundraising is consolidating. The median fund close now takes 22 months, up from 16 months in 2020. LPs are backing fewer managers with bigger checks. Emerging managers need to differentiate through operational capability and sector specialization.
For founders considering a PE partnership. The buyer seller valuation gap is narrowing. Deals in the pipeline are priced at more realistic levels than a year ago. Buyers are investing in proper due diligence again. Pre COVID rigor has returned.
For investors seeking exposure. 2026 is a fundamentals first year. Capital will reward revenue growth, efficiency and real competitive advantages. It will not reward superficial positioning or undifferentiated models.
EONXI operates across the full spectrum. We build companies through our studio, advise them through our advisory practice and invest through our ventures arm. That integrated model gives us a vantage point that pure financial sponsors do not have.
The private equity market in 2026 is ready. The capital is there. The exits are reopening. The question is whether you are positioned to capture the opportunity.
