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Cherry Bekaert's Mid-Year Private Equity Report 2026

Overview

The recent Mid-Year Private Equity (PE) Report from Cherry Bekaert has revealed that private equity sponsors deployed approximately $461 billion in the first half of 2026. This marks a decline of 10.6% compared to the same period last year, however, the transaction volume has remained consistent as firms increasingly shifted their focus toward smaller deals and add-on acquisitions.

The report, drawing from data provided by Pitchbook alongside proprietary insights from the firm, offers a deep dive into the landscape of mergers and acquisitions as it stood on June 30. The analysis highlights key trends impacting deals and fundraising amidst a market characterized by unpredictability.

Key Findings

Market Influencers

The report identifies three main dynamics that have influenced PE activity in the second quarter of 2026:
1. Persistently High Interest Rates: The Federal Reserve's decision to maintain a restrictive interest rate environment has prompted sponsors to adapt their strategies, with no anticipated cuts as previously expected.
2. Inflationary Pressures from Energy Markets: Ongoing tensions, particularly the conflict in Iran, have impacted energy prices and created inflationary shocks that have echoed throughout the market.
3. Concerns over AI Valuation Risks: The rapid advancement of artificial intelligence has raised questions on how it could affect the valuation of portfolio companies and acquisition targets, pushing sponsors to focus on businesses with predictable pricing.

Transaction Volume and Deal Performance

Despite the decrease in the monetary value of transactions, the deal activity remains sturdy. The report notes:

• - Transaction Count: In the second quarter, approximately 2,384 deals were completed, a figure comparable to the previous quarter and an 11.5% increase year-over-year.
• - Large Deal Decline: Notably, transactions exceeding $2.5 billion totaled just $25.9 billion across five large deals, marking a stark 59.7% year-over-year decline.
• - Add-On Acquisition Dominance: Add-on acquisitions represented about three-quarters of all deal activities, emphasizing the shift in focus towards nurturing existing investments rather than pursuing high-stakes large deals.
• - Software and Energy Deal Trends: The software sector saw deal values plummet to $10.7 billion (a 65.7% year-over-year decline), in contrast to the energy sector which experienced an 80.5% growth in deal value amid escalating demand for datacenter-driven energy solutions.

Stock Market Activity

Additionally, exit values saw a sharp decrease of 46.3%, falling to $102.6 billion, as the number of PE-backed companies increased to 13,509. In contrast, initial public offerings (IPOs) surged by 42.2%, reaching $27.6 billion—a reflection of renewed investor interest, as the number of IPOs doubled to 12.

Importantly, the report indicates that dry powder, or uninvested capital, remains high at approximately $1.07 trillion, signaling significant liquidity waiting to be deployed into the market.

Expert Insights

Scott Moss, Partner and Financial Services Industry Leader at Cherry Bekaert, emphasized the unique challenges facing sponsors in today's evolving market. He remarked, "Each of the three shocks posed a fundamental question: what is this business truly worth when it comes time to sell? While sponsors have navigated high-interest environments before, they are now faced with the potential transformative effects of AI on competitive positioning during a hold period. This uncertainty has driven them toward opportunities that feel more manageable and predictable."

Looking Ahead

As we move toward the latter half of 2026, the report suggests an uneven market landscape. The expected continuation of carve-outs and take-private transactions is anticipated to foster some deal activity. Meanwhile, evolving liquidity solutions and private credit arrangements will adapt in response to the changing financial environment.

For a comprehensive exploration of the trends expected to shape private equity activities for the rest of 2026, the full report is available for review.