1H 2026 By the Numbers

Data from Pitchbook, U.S. private equity deals completed through June 30, 2026

Deal activity: Fewer transactions, more selectivity

Private equity firms completed 3,999 U.S. transactions during the first half of 2026, compared with 4,619 completed deals during the second half of 2025.

Deal volume slowed materially in Q2, falling to 1,808 completed transactions from 2,191 in Q1, reflecting a market that remains highly selective despite abundant dry powder.

Capital deployed totaled approximately $314 billion during the first half of the year, indicating that sponsors remain willing to invest significant capital when opportunities meet increasingly stringent underwriting criteria.

The decline in deal count should not be interpreted as a lack of confidence. Rather, it reflects a continued focus on:

• Revenue durability

• Pricing power

• Sector resilience

• Quality of earnings

• Downside protection

Many sponsors continue to prioritize platform investments and larger strategic opportunities over broad-based deal volume.

Valuations: Stabilization, but growing asset-level dispersion

Valuation trends tell a nuanced story.

Median implied EV/EBITDA multiples averaged 13.4x through the first half of 2026, lower than the 14.6x average recorded during 2025.

However, beneath headline averages, valuation dispersion has widened significantly based on asset characteristics.

The market is no longer repricing private equity broadly. Instead, sponsors increasingly price macroeconomic risk at the asset level.

Company quality: Larger assets continue to attract capital

The median EBITDA of acquired companies increased dramatically in 2026.

Median target EBITDA reached:

• $30.3 million in Q1

• $64.5 million in Q2

compared with a full-year average of only $30 million during 2025.

This suggests sponsors continue to favor:

• Larger platforms

• Businesses with proven scalability

• Companies capable of supporting value-creation programs

The “flight to quality” that emerged during 2025 remains firmly intact.

Exit markets: The industry's biggest constraint remains

If dealmaking was the story of cautious improvement, exits remain the market’s biggest challenge. Only 872 PE-backed exits were completed during the first half of 2026, compared with 1,210 in 1H 2025; and while exit values increased substantially – $383 million in 1H 2026, up from $236 million in 1H 2025 – transaction volumes remain historically constrained.

Sponsors continue to face:

• Extended hold periods

• Limited (though opening) IPO windows

• Ongoing valuation friction

• Buyer selectivity

As a result, many firms are increasingly utilizing the following rather than pursuing traditional full exits:

• Continuation vehicles

• GP-led secondaries

• Minority recapitalizations

• Structured liquidity solutions

The challenge is no longer finding capital, but converting unrealized gains into distributions.

This dynamic continues to affect fundraising, portfolio management, and capital recycling across the industry.

The macroeconomic forces shaping private equity in 2026

Interest rates: Less restrictive, more predictable

The most important development during the first half of 2026 may not have been rate reductions themselves, but increased predictability. The uncertainty surrounding rates has diminished considerably, helping facilitate improved transaction activity.

Sponsors now have greater confidence in underwriting assumptions surrounding:

• Cost of capital

• Refinancing activity

• Debt service capacity

• Exit scenarios

While rates remain elevated compared with pre-2022 levels, the market has largely adjusted.

Consumer spending: The wild card

The health of the consumer remains one of the most important variables for private equity sponsors.

Although consumer spending has not deteriorated materially, pressure points are emerging:

• Elevated household debt

• Slowing wage growth

• Labor-market uncertainty

• Reduced discretionary spending

Even B2B businesses remain indirectly exposed. As history demonstrates, consumer weakness affects non-consumer businesses eventually, through delayed purchasing, reduced capital spending, slower hiring, and tighter credit conditions.

Sponsors should continue aggressive stress testing across portfolios, particularly in sectors dependent upon discretionary spending.

AI: From experimentation to execution

Artificial intelligence has become one of the most influential forces shaping private equity strategy.

The most successful firms are no longer asking whether AI matters, but where AI creates measurable value.

Leading applications include:

• Deal screening

• Diligence acceleration

• Portfolio analytics

• Operational productivity

• Risk assessment

Importantly, AI remains an accelerator rather than a replacement.

In the middle market especially, many portfolio companies still face foundational challenges involving data quality, governance, and technology maturity.

In terms of investment, the greatest opportunities may reside not within AI companies themselves, but in the infrastructure supporting AI adoption:

• Data centers

• Power infrastructure

• Engineering services

• Precision manufacturing

• Network and connectivity providers

• Workforce training platforms

These “pick-and-shovel" investments supporting AI growth may ultimately generate more consistent returns than direct technology bets.

Tariffs and supply chains: Less visible, still relevant

Tariffs have largely disappeared from daily headlines, but they have not disappeared from diligence. Many businesses have been adapting through:

• Supplier diversification

• Nearshoring strategies

• Supply-chain redesign

• Geographic risk mitigation

Yet these changes remain expensive and time-consuming. As a result, sponsors continue to favor businesses with limited exposure to international supply-chain disruption, contributing to strong activity across:

• Professional services

• Engineering

• Healthcare

• Infrastructure services

Geopolitical and regulatory risk

Sponsors increasingly view geopolitical risk as a permanent underwriting consideration rather than a temporary disruption. Areas attracting heightened diligence include:

• Defense-related contracting

• Cybersecurity compliance

• Government services

• Healthcare regulation

• Trade policy exposure

The expansion of CMMC cybersecurity requirements for defense contractors represents one example where operational readiness increasingly influences valuation and transaction attractiveness.

Where opportunity exists for the rest of 2026

Several themes appear likely to drive activity through year-end.

Infrastructure and AI ecosystem investments

As discussed above, demand associated with AI-enabled infrastructure continues to expand. Sponsors are increasingly focused on businesses tied to:

• Data-center construction

• Energy infrastructure

• Specialized manufacturing

• Engineering and design services

• Cooling and power systems

This trend appears likely to remain one of the strongest investment themes for the remainder of the year.

Healthcare and life sciences

Healthcare continues to benefit from:

• Non-discretionary demand

• Demographic tailwinds

• Relative insulation from tariff exposure

• Persistent fragmentation

Life sciences, outsourced healthcare services, and specialty providers remain particularly attractive.

Professional and technical services

Professional services businesses continue to attract capital due to:

• Predictable cash flow

• Limited inventory risk

• Pricing power

• Fragmented market structures

Sponsors increasingly view these businesses as attractive platforms for operational enhancement and AI-enabled productivity gains.

Next-generation roll-up opportunities

Traditional HVAC and industrial-service roll-ups have continued to become highly competitive. The next generation of consolidation strategies appears focused on:

• Technical education

• Workforce training

• Precision manufacturing

• Specialized trades

• Niche business services

Fragmentation remains substantial, creating opportunities for disciplined platform strategies.

Strategic priorities for PE leaders through year-end

The firms likely to outperform during the remainder of 2026 will focus on five priorities:

1. Prioritize operational value creation. Returns will increasingly come from execution, not multiple expansion.
2. Prepare for extended hold periods. Exit windows continue to improve slowly rather than rapidly.
3. Underwrite for volatility. Economic normalization remains incomplete.
4. Build AI capabilities thoughtfully. Focus on repeatable productivity gains rather than experimentation alone.
5. Maintain capital deployment discipline. Abundant dry powder remains available, but selectivity continues to be rewarded.

Looking ahead: Execution becomes the edge

At the start of 2026, many private equity firms were waiting for certainty. By mid-year, it has become increasingly clear that certainty is unlikely to arrive. Instead, firms have adapted to a market defined by persistent – but manageable – uncertainty.

The remainder of 2026 is likely to bring continued improvement in transaction activity, modest strengthening in exit markets, and growing opportunities across infrastructure, healthcare, professional services, and AI-enabled industries. Yet risks remain. Consumer weakness, geopolitical volatility, regulatory developments, and uneven economic growth will continue to challenge sponsors.

For private equity leaders, success will belong to firms that stop waiting for ideal conditions and instead build strategies capable of performing across multiple economic outcomes.