Key Takeaways
- • Private equity acquisition activity rose in Q3, with firms announcing 126 deals valued at US$228b, a 43% increase by value from Q2, according to EY's Private Equity Pulse.
- • Exits reached US$212b in Q3, up 15% from Q2 and 17% year over year, lifting trailing 12-month exits to US$875b, a 26% increase over the prior 12 months.
- • Year-to-date deployment is down 13% from 2025, attributed to fewer megadeals: four deals above US$10b so far in 2026 versus 11 last year. Deal value below the US$10b threshold rose 4% year over year.
- • 80% of general partners report higher AI-related spending across their portfolios over the past year, but 40% say AI benefits have not yet been quantified financially, and 40% expect measurable net returns within 12 months.
- • 40% of firms have stepped away from a potential tech investment in the past 12 months due to AI-led disruption concerns, keeping the sector selective.
Summary
EY's Private Equity Pulse for Q3 2026 shows private equity acquisition activity recovering after a challenging first half. Firms announced 126 deals valued at US$228b in the quarter, a 43% increase by value versus Q2. EY characterizes deployment as a substantial but selective pace, with sponsors concentrating on businesses where they have conviction in earnings and long-term value creation. General partners remain constructive: 64% expect their firm's deployment to increase over the next six months, though that is down from 72% in the prior quarter.
Year-to-date deployment is down 13% from 2025, which EY attributes to a decline in megadeals rather than broad weakness. There were 11 transactions above US$10b last year contributing US$219b, compared with four such deals so far in 2026 contributing US$114b. Below that threshold, announced deal value has risen 4% from last year. Technology remains the most cautious sector, with 40% of firms reporting they stepped away from a potential tech investment over the past 12 months because of AI-led disruption.
Liquidity pressure is easing. Exits totaled US$212b in Q3, up 15% from Q2 and 17% from the same period last year. Realizations, measured by deal value, are running nearly US$28b ahead of deployment this year. GPs rated distribution pressure from limited partners at 6.1 on a 1-to-10 scale in the latest survey, broadly unchanged from 6.3 last year but well above 5.6 two years ago. The share of GPs rating pressure at 8 or higher has risen to 34% from 6% two years ago. Looking ahead, 42% expect distributions to increase this year, while 10% expect a decline.
AI investment is accelerating across portfolios, with 80% of GPs reporting higher AI-related spending over the past year and 39% reporting increases of 25% to 49%. Spending is concentrated in software models, APIs and vendor licenses, cited by half of GPs, followed by cloud and compute infrastructure, systems integration and workflow redesign. EY notes that adoption maturity lags deployment: many firms have not yet set strategy or governance, and portfolio companies lag further. Forty percent of GPs say AI benefits have emerged but are not yet quantified, 13% report gains that have not offset cumulative investment, and 19% are generating positive net returns.
EY concludes that private equity enters the final quarter of 2026 on firm footing, with resilient deployment outside megadeals, stronger exits and more than half of GPs expecting topline (54%) and EBITDA (60%) growth over the coming year.
Year-to-date deployment is down 13% from 2025, which EY attributes to a decline in megadeals rather than broad weakness. There were 11 transactions above US$10b last year contributing US$219b, compared with four such deals so far in 2026 contributing US$114b. Below that threshold, announced deal value has risen 4% from last year. Technology remains the most cautious sector, with 40% of firms reporting they stepped away from a potential tech investment over the past 12 months because of AI-led disruption.
Liquidity pressure is easing. Exits totaled US$212b in Q3, up 15% from Q2 and 17% from the same period last year. Realizations, measured by deal value, are running nearly US$28b ahead of deployment this year. GPs rated distribution pressure from limited partners at 6.1 on a 1-to-10 scale in the latest survey, broadly unchanged from 6.3 last year but well above 5.6 two years ago. The share of GPs rating pressure at 8 or higher has risen to 34% from 6% two years ago. Looking ahead, 42% expect distributions to increase this year, while 10% expect a decline.
AI investment is accelerating across portfolios, with 80% of GPs reporting higher AI-related spending over the past year and 39% reporting increases of 25% to 49%. Spending is concentrated in software models, APIs and vendor licenses, cited by half of GPs, followed by cloud and compute infrastructure, systems integration and workflow redesign. EY notes that adoption maturity lags deployment: many firms have not yet set strategy or governance, and portfolio companies lag further. Forty percent of GPs say AI benefits have emerged but are not yet quantified, 13% report gains that have not offset cumulative investment, and 19% are generating positive net returns.
EY concludes that private equity enters the final quarter of 2026 on firm footing, with resilient deployment outside megadeals, stronger exits and more than half of GPs expecting topline (54%) and EBITDA (60%) growth over the coming year.
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