Private Equity Shifts to Smaller Deals Amid Market Uncertainty
Event summary
- Private equity sponsors deployed $461 billion in H1 2026, down 10.6% YoY.
- Transaction volume remained flat at 2,384 deals in Q2 2026, up 11.5% YoY.
- Add-on acquisitions accounted for 75% of buyout activity.
- Software deal value dropped 65.7% YoY to $10.7 billion.
- Dry powder remained elevated at $1.07 trillion.
The big picture
Private equity deal activity remains resilient despite market uncertainty, with sponsors shifting toward smaller platform deals and add-on acquisitions. The industry faces higher-for-longer interest rates, energy-driven inflation shocks, and growing AI-related valuation risks, which are reshaping dealmaking strategies. With $1.07 trillion in dry powder, the sector is poised for continued activity, though transaction values are expected to remain under pressure.
What we're watching
- Valuation Risk
- How AI-related valuation risk will affect PE sponsors' ability to confidently price and evaluate targets.
- Market Liquidity
- Whether the elevated dry powder of $1.07 trillion will continue to support deal flow amid uneven market activity.
- Sector Shifts
- The pace at which PE sponsors pivot from software to energy deals driven by datacenter power demand.
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