Private Equity Firms Brace for Rising Deal Prices Amid Tight Competition — BDO USA, P.C.

Event summary

82% of private equity firms expect deal prices to rise in the next 12 months due to tight competition and a shortage of quality assets.
80% of firms report holding portfolio companies for five years or longer to achieve acceptable returns.
94% of respondents say AI is fundamentally reshaping their investment thesis across the deal lifecycle.
41% of firms rely on private credit as their primary funding source to navigate pricing pressures and deal competition.
48% of firms cite talent acquisition and retention as their biggest barrier to deal execution.

The big picture

The private equity industry is adapting to a market where excess dry powder is chasing fewer quality assets, pushing firms to extend hold periods and rethink value creation strategies. Larger funds are increasingly turning to take-private transactions as an alternative to hyper-competitive auctions, while AI is becoming a critical tool in reshaping investment theses. The reliance on private credit underscores the need for flexibility in financing as firms navigate pricing pressures and deal competition.

What we're watching

Pricing Pressure: How rising deal prices will affect returns and force firms to rethink valuation strategies.
AI Integration: The pace at which AI adoption will differentiate firms in deal sourcing, due diligence, and value creation.
Talent Wars: Whether firms can sustain competitive advantage by attracting and retaining top talent in a tight labor market.