Bain & Company’s 2026 Private Equity Midyear Report says the industry’s early recovery has slowed as technology valuations, private credit stress, and energy market volatility weigh on dealmaking. According to the report, technology deal value fell 70% from the fourth quarter of 2025 to the first quarter of 2026 after a pullback in software valuations.
A combined index of purchase multiples and financing costs has hit a record high, making current buyouts more expensive than almost any period in industry history. This environment forces a sharp shift in underwriting expectations. A transaction that required 5% annual EBITDA growth for a 2.5x return a decade ago now demands 10% to 12% growth to achieve the same result.
The industry faces a severe liquidity crunch with an estimated 33,000 unsold portfolio companies. Holding periods now average seven years, stretching well beyond historical norms. Despite rising investor skepticism regarding private market marks, proprietary MSCI data shows that 75% of buyout assets still manage to exit above their next-to-last quarterly valuation.
Strategic adjustment is increasingly mandatory as negotiating leverage shifts toward limited partners. Hugh MacArthur, chairman of the global PE practice at Bain, stated that generating consistent outperformance will require "an ever-sharper strategic focus and, crucially, the disciplined value creation system to back it up."
Forward-looking indicators suggest the sluggish environment will persist through the summer. Early signal data from Ontra, an AI workflow platform tracking non-disclosure agreements, points to flat deal activity through July 2026. Leading firms are responding by rotating capital toward sectors insulated from near-term AI disruption.