After years of tribulations, last year brought glimmers of hope for the private equity industry, with a boom in deals, capital raised, and, a fundamental piece for LPs’ liquidity needs, company exits. However, the current landscape of volatility in global markets casts doubt on the immediate future of deals, especially considering the weakness in IPO activity and the concentration in megadeals seen in the recent past.
The global private capital market began this year with considerable optimism, according to consulting firm KPMG. “A deep pool of available capital, an improved divestment environment, and a sense that macroeconomic conditions were stabilizing gave investors cautious confidence. This continued into the beginning of 1Q 2026; however, the sudden conflict in the Middle East understandably brought an initial contraction in the market,” said Gavin Geminder, Global Head of Private Equity at the firm, in a recent report.
Given the timing of the military conflict involving the U.S., Israel, and Iran, the impact was relatively contained in the first quarter. Between January and March, 4,168 private equity-related deals were announced, totaling $436 billion. Measured on a trailing 12-month basis, this marked a slight decline, from $2.2 trillion to $2.1 trillion. The number of deals fell even more sharply: from 21,026 last year to 19,682 this year.
Exits, in particular, are facing a complicated landscape, according to Geminder. Despite a solid aggregate value of $294 billion, the first quarter closed with only 635 divestment deals, including weak public listing activity of just 31 transactions. “Exit volume declined across all types of divestments, highlighting the ongoing struggle to realize assets and return capital to investors,” the executive stated.
This weakness did not affect only the public markets as a divestment engine for private capital. Figures from S&P Global Market Intelligence reflected 614 M&A transactions in the first quarter of 2026, marking a 22% decline from the 785 transactions in the previous year. That said, aggregate value increased: it rose 12.6% in the first quarter, from $137.31 billion to $154.64 billion.
First-Quarter Signals
Amid corporate earnings season, some major names in private equity are pointing to a landscape of concern, but also conviction in each investment house’s ability to execute investments. Despite the uncertainties affecting trading desks globally, managers have roadmaps to provide liquidity to their LPs.
“Suddenly, the public markets for private assets are back at the center of attention. While there could be, given the uncertainty of the war, some slowdown in monetization via IPOs, that does not mean the world’s sophisticated sponsors — along with some well-capitalized corporates — are not thinking about whether they can take advantage of certain dislocations. There are many ways to think about that,” said Denis Coleman, CFO of Goldman Sachs, during a call with investors.
Although PE sponsor activity has been slow, he noted that the U.S. financial giant expects it to accelerate. “It has been slower than we expected, but the business is sufficiently large, broad, and diversified so that even with slower sponsor activity, it does not have a major impact on the business overall,” he added, emphasizing that they are focused on generating strong exit dynamics within their portfolio.
In its own quarterly earnings call, EQT AB celebrated the largest PE sponsor-led block trade in history, achieved through the sale of Galderma, part of its eighth private equity fund. CEO and Managing Partner Per Franzén emphasized that this success came during a period of high uncertainty and volatility driven by tariffs and White House decisions.
Looking ahead, the firm expects to maintain the pace. “During this period of volatility, we remain focused on executing our exit agenda,” the executive assured investors, adding that they are targeting around 30 divestment transactions this year, in line with 2025. “Of course, everything is subject to market conditions, but what gives me confidence is that this exit pipeline is well diversified across strategies, asset classes, infrastructure, private equity, early-stage investments, and sectors.”
Blackstone also addressed the issue in its quarterly conference call. Michael Chae, Vice Chairman and CFO of the manager, highlighted that they managed to complete four IPOs within their portfolio last year, but that the outlook ahead is marked by turbulence. “Recent and significant market volatility and widespread uncertainty have had the effect of extending exit pipelines and slowing realization activity in the short term,” he commented, adding that “if there is a lasting resolution to the conflict in the Middle East, we expect robust activity in the second half of the year.”
In the coming days, Apollo, Carlyle, and New Mountain Capital will hold their own conversations with analysts and investors, offering their respective perspectives.
Better Numbers, for Fewer Players
Even before the uncertain global context complicated the outlook, last year’s private equity recovery already had nuances, especially considering the concentration in megadeals.
“Exit activity rebounded strongly in 2025, with global deal value reaching $905 billion. But 78% was concentrated in mega exits, leaving the mid-market inventory effectively stalled,” Allianz warned in a report during the first quarter. “Until liquidity broadens beyond the top tier, normalization of distributions remains structurally incomplete,” the firm stated.
In that sense, Allianz sees the industry at a “turning point,” where last year’s recovery appears more selective than broad-based.
Regarding divestment strategies, the firm sees IPOs as the missing piece, with relatively robust corporate activity — reaching a record last year with deals totaling $299 billion — and sponsor-to-sponsor activity recovering. In that regard, IPO activity appears fragile in the U.S. and deteriorating in Europe. “This suggests that IPO markets may resume in the future, although likely with structurally lower volume than in past cycles,” they added.
From PwC, global PE leader Eric Janson emphasized that, while there are signs of recovery, this type of exit remains relatively small compared with other routes. For that reason, the consultant stated in a recent report, “secondary transactions, including sponsor-to-sponsor deals and continuation vehicle transactions, are expected to remain the dominant exit route for private equity firms in 2026.”
In that regard, the expectation is that these challenges will have an impact on the industry. Ultimately, as noted in a McKinsey report, “the ability to generate exits through secondaries or other routes remains critical for returning capital to LPs while also supporting managers’ ability to raise new funds.”
While the industry’s largest GPs continue raising large flagship funds, the “long tail” of managers behind them are unable to keep pace. “Some are facing capital constraints as divestments have slowed and LPs demand returns,” the consultancy indicated.
