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Insights from Dechert's 2026 Global Private Equity Outlook

Dechert LLP has unveiled its eighth annual Global Private Equity Outlook, revealing significant trends in the private equity landscape influenced by shifting market dynamics. Collaborating with Mergermarket, the report indicates that a robust increase in buyout and exit values is enhancing confidence among general partners (GPs) regarding the outlook of private equity over the coming year. This optimism persists despite ongoing fluctuations in trade policies, political uncertainties, and a complex geopolitical environment.

Key Findings from the Report

The report has synthesized responses from top executives at private equity firms across North America, EMEA (Europe, Middle East, and Africa), and APAC (Asia-Pacific). Below are some major highlights:

1. Geopolitical Concerns: A notable 49% of executives pinpoint geopolitical issues as a critical factor influencing the deal environment in the upcoming 12 to 18 months. Alarmingly, 65% of EMEA respondents view these conflicts as a significant obstacle compared to just 30% from APAC, illustrating regional disparities in risk perception.

2. Return Expectations: Respondents from North America and EMEA forecast an average return of 17.1% for 2025, while optimism peaks in APAC at 17.4%. This marks a positive trajectory compared to last year's outlook, showcasing a revived hope for substantial returns.

3. Valuation Strategies: Approximately 48% of GPs are now utilizing earnouts to bridge valuation inconsistencies, with APAC firms leading at 60% adoption of this strategy. This indicates an adaptive approach to negotiating and closing deals successfully.

4. Sector Focus: A majority, specifically 75% of survey participants, plan to invest in the life sciences sector within the next two years, closely followed by the tech industry at 74%. Such preferences highlight where growth is anticipated amid broader economic changes.

5. Co-Investment Opportunities: Among respondents, 52% have implemented co-investment programs, catering to limited partner (LP) requests, especially in private credit loans. This strategy reflects a growing trend towards collaboration and shared investment opportunities.

6. Innovative Fundraising: A solid 64% of firms are branching out into new investment strategies to alleviate fundraising challenges. This flexibility is crucial as market conditions evolve.

7. GP-Led Strategies: A significant 46% utilize GP-led secondaries or continuation vehicles to manage distributions efficiently, indicating a notable shift towards alternative funding mechanisms.

8. Future Plans: Impressively, 77% of firms are eyeing GP-stake divestitures within the next two years, doubling last year’s figures. This trend suggests a proactive approach to liquidity and portfolio management.

9. Impact of Antitrust Issues: Nearly half (47%) anticipate adverse effects stemming from increased politicization of merger controls, reflecting growing regulatory complexities in deal-making.

10. Democratization of Private Equity: An encouraging 73% of GPs foresee retail investors contributing at least 10% to their next fund, signaling a progressive shift towards inclusivity in investment opportunities.

11. Utilization of Private Credit: With 57% of GPs employing private credit for refinancing or recapitalization, it emerges as the leading application among the surveyed executives, demonstrating its vital role in the current landscape.

12. Fund Finance Expectations: Interestingly, a considerable 36% predict an increase in fund financing availability over the next year and a half, compared to a mere 2% who foresaw such a rise last year.

Expert Insights

Dr. Markus P. Bolsinger, co-head of Dechert's global private equity practice, emphasizes that the momentum in the market comes from the ability of sponsors to unlock liquidity and redeploy capital creatively. Tools such as earnouts, continuation vehicles, and enhanced fund financing are becoming essential strategies to overcome valuation disparities and strengthen investor base diversity, including the retail sector. He advises stakeholders to engage seasoned experts early on to navigate the intricate regulatory environment that comes with these evolving dynamics.

As we approach 2026, the evolve-and-adapt mindset of GPs highlights a resilient industry willing to innovate even amidst external challenges. With flexible capital solutions, rigorous sector choices, and proactive liquidity strategies, private equity is poised for growth and evolution.

Overall, Dechert's 2026 Global Private Equity Outlook reveals a landscape ripe with opportunities and challenges that investors and firms alike must navigate skillfully. The full report is available for download on Dechert's official website.