2025 was, on paper, a strong year:
But behind the headline numbers lies a more complex story. Despite high values, deal and exit volumes declined, signalling that getting transactions over the line remains challenging. A handful of very large North American deals masked a more subdued market underneath.
Looking to 2026, webinar polling showed participants expect deal volume to be largely flat, with optimism still limited as valuation expectations remain the biggest barrier to closing.
Liquidity resurfaced as one of the most urgent structural issues private equity faces today.
Key pressures include:
The prolonged hold periods stem from a persistent bid‑ask spread: sellers are reluctant to transact below existing marks, while buyers struggle to underwrite deals with confidence until performance improves further.
Despite this, the consensus from Bain is clear: extended holding periods cannot become the new normal if the industry is to remain healthy.
While total alternative assets remained flat at $1.3 trillion, the picture for buyout funds was more challenging:
This is contributing to a likely shake‑out in the market. Bain estimates 20–40% of funds may not successfully re‑raise, with DPI emerging as the key differentiator for LP decision‑making.
For the first time, US public equities outperformed average US buyout returns over 5‑ and 10‑year periods. This makes diversification an increasingly important case for private equity allocation - especially as public market performance has been driven by a narrow set of mega‑cap names.
Private equity continues to offer a different mix of assets, particularly in IT:
For LPs, this difference matters. Diversification, combined with the outperformance of top‑quartile funds, reinforces the importance of manager selection and repeatable value creation models.
One of the strongest themes from the webinar, and already a widely quoted takeaway, is Bain’s assertion that “12 is the new 5.”
A decade ago, achieving a 20% IRR over a five‑year hold required around 5% EBITDA growth per year.
Today, the same target requires around 12% annual EBITDA growth, driven by:
This raises the bar for both underwriting discipline and portfolio value creation, placing greater emphasis on revenue growth, margin expansion, M&A execution, and leadership effectiveness.
With rising costs, fee pressure, and greater competition, private equity is entering a more mature phase. The old strategy, “make the next deal great”, no longer works in an environment where not everyone can win.
Winning firms will be those that can clearly articulate what makes them different, backed by evidence. Bain outlined several routes to competitive advantage, including:
LPs are increasingly seeking GPs with a repeatable alpha model, a consistently demonstrated ability to generate outperformance over time.
AI’s role in private equity is accelerating. Bain emphasised that assessing AI’s impact on a business, whether as an opportunity or a threat, is now essential in due diligence.
Key considerations include:
AI is becoming a central theme across strategic planning, underwriting, and portfolio transformation.
The private equity industry enters 2026 at a critical inflection point. While headline numbers show resilience, deeper structural challenges, from liquidity to fundraising pressure, are reshaping what it takes to succeed.
Firms that thrive will be those that:
In an environment where “12 is the new 5,” the ability to deliver meaningful EBITDA growth and to articulate how it will be achieved, will define the leaders of the next decade.
The webinar made it clear that private equity firms must communicate more clearly, more consistently, and with stronger proof of differentiation. That’s where we come in.
We help firms articulate their value creation story, especially important in a world where “12 is the new 5” and stakeholders need confidence in your strategy and outcomes.
We bring clarity to complexity, translating market pressures, liquidity challenges and performance expectations into simple, compelling narratives that build trust with LPs and other stakeholders.
We create integrated reporting and digital experiences that communicate strategy, performance and impact coherently across channels, critical as investors rely on both human and AI‑driven search to form their view of a firm.
If you’d like to explore how we can support your private equity communications and engagement, we’d love to talk:
Bob Crosbie-Dawson, Head of Business Development
BCrosbie-Dawson@blacksun-global.com
Black Sun Global is a stakeholder advisory and engagement agency that's been driving transformation and positive change for ambitious brands for more than 20 years. With deep expertise in disclosure and reporting, ESG, sustainability, and digital engagement, we reshape how organisations connect with customers, investors, employees, and the wider world.
We are trusted partners to some of the most influential global organisations, sparking innovation and sustainable performance through our strategic insights, partnerships, and proprietary technologies.
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For more information, please visit: www.blacksun-global.com
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