Private Equity GPs Confront Valuation Hurdles, Embrace AI in 2026
Event summary
- Bain & Company and StepStone Group released their inaugural GP Outlook survey, based on data collected between December 2025 and January 2026.
- The survey included insights from over 100 investment and investor relations professionals, primarily in North America and Europe.
- Valuation disagreements were the primary reason for deal failures in 2025, surpassing typical diligence or macroeconomic concerns.
- Approximately 25% of GPs have recently utilized or are considering continuation vehicles to return capital to investors.
- StepStone Group manages approximately $811 billion in total capital, including $220 billion in assets under management as of December 31, 2025.
The big picture
The GP Outlook signals a shift in the private equity landscape, moving beyond multiple expansion as a primary driver of returns. GPs are now under pressure to deliver operational value creation, particularly through the adoption of AI, while navigating persistent valuation challenges and increased fee pressure. This underscores a broader trend of increased scrutiny and a demand for demonstrable alpha generation within the private equity asset class.
What we're watching
- Deal Dynamics
- The ability of GPs to overcome valuation hurdles will be a key determinant of deal closure rates, potentially favoring those with disciplined underwriting and operational expertise.
- AI Integration
- The extent to which GPs can translate AI-driven efficiencies in deal sourcing and due diligence into broader portfolio company performance will influence future fund returns.
- Fund Economics
- The trend of GPs offering discounts and co-investment opportunities to secure capital may intensify if fundraising conditions remain challenging, impacting overall fund economics.
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