Key Takeaways
- • Global PE acquisitions contracted 10% in H1 2026 versus H1 2025, though aggregate deal value remained roughly flat, indicating selective deployment rather than broad market retreat.
- • Tech-focused transaction value collapsed 50% year-over-year while non-tech deals increased 9%, reflecting sponsor rotation away from software amid AI-driven underwriting reassessment of growth assumptions and pricing power.
- • US deal value declined 25% between H1 2025 and H1 2026, driven primarily by pullback in large software take-privates that previously anchored PE deployment activity in the region.
- • Exit activity remained steady with announced exit value up 9% versus H1 2025, with trade sales continuing to anchor the exit market as sponsors maintain confidence in liquidity.
- • 72% of GPs expect deployment activity to increase over the next six months, and 56% anticipate exits to meaningfully accelerate, signaling optimism despite current market caution and selective positioning.
Summary
Private equity activity moderated in the first half of 2026 as sponsors adopted a more selective approach amid market uncertainty and structural shifts in technology valuations. According to EY's Private Equity Pulse report, global PE acquisitions fell 10% in H1 2026 compared to the same period in 2025, though aggregate deal value remained roughly flat, suggesting that the market contraction was concentrated in specific sectors rather than representing a comprehensive pullback.
The headline decline masks a significant rotation in deployment strategy. While technology-focused transactions experienced a severe correction, falling 50% year-over-year, non-tech deal activity rose 9%, demonstrating that sponsors are not withdrawing from the market but rather applying heightened scrutiny to sectors vulnerable to AI disruption. This selective approach reflects investment committee reassessment of underwriting assumptions around growth trajectories, pricing power sustainability, and long-term competitive defensibility in software and related technology assets.
The US market bore the brunt of this sector rotation. Deal value in the US fell 25% between H1 2025 and H1 2026, primarily due to the reset in large software take-privates that had dominated PE deployment in preceding years. This geographic concentration underscores how the technology sector realignment is reshaping capital deployment patterns across the industry.
Exit momentum remained resilient despite deployment selectivity. Announced exit value increased 9% versus H1 2025, with trade sales continuing to serve as the market's primary exit anchor. This stability in exit activity provides important liquidity support for the PE ecosystem and suggests that sponsor confidence in realizations remains intact despite acquisition selectivity.
Forward-looking sentiment among general partners remains constructive. Seventy-two percent of GPs anticipate deployment activity will increase over the next six months, while 56% expect exits to meaningfully accelerate. This optimism suggests that sponsors view current market conditions as a tactical pause rather than the onset of structural decline, with expectations anchored to firmer pricing, improving liquidity conditions, and confidence in 2025-vintage fund performance.
The headline decline masks a significant rotation in deployment strategy. While technology-focused transactions experienced a severe correction, falling 50% year-over-year, non-tech deal activity rose 9%, demonstrating that sponsors are not withdrawing from the market but rather applying heightened scrutiny to sectors vulnerable to AI disruption. This selective approach reflects investment committee reassessment of underwriting assumptions around growth trajectories, pricing power sustainability, and long-term competitive defensibility in software and related technology assets.
The US market bore the brunt of this sector rotation. Deal value in the US fell 25% between H1 2025 and H1 2026, primarily due to the reset in large software take-privates that had dominated PE deployment in preceding years. This geographic concentration underscores how the technology sector realignment is reshaping capital deployment patterns across the industry.
Exit momentum remained resilient despite deployment selectivity. Announced exit value increased 9% versus H1 2025, with trade sales continuing to serve as the market's primary exit anchor. This stability in exit activity provides important liquidity support for the PE ecosystem and suggests that sponsor confidence in realizations remains intact despite acquisition selectivity.
Forward-looking sentiment among general partners remains constructive. Seventy-two percent of GPs anticipate deployment activity will increase over the next six months, while 56% expect exits to meaningfully accelerate. This optimism suggests that sponsors view current market conditions as a tactical pause rather than the onset of structural decline, with expectations anchored to firmer pricing, improving liquidity conditions, and confidence in 2025-vintage fund performance.
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