Letter from the Editors
The private equity industry moves into 2026 with surer footing and solid reasons for optimism, fueled by greater market stability and lower interest rates. The fundraising environment is becoming less foreboding and the high-yield debt market remains favorable. The M&A market in Europe and Asia is more robust, and while sponsors in the United States have been focused on bolt-on opportunities, the combination of pent-up dry powder and narrowing valuation gaps points toward the possibility of more transformational deal activity in 2026. U.S. fund regulators have made dialogue with the industry and alignment with market innovation an explicit priority, while in the European Union, progress (albeit slow) continues toward streamlining regulations to enhance competitiveness and free up investment capacity.
But even with these numerous positive developments, there is still plenty of uncertainty. Real estate investors must contend with fragile capital structures, a bifurcated office market and supply-side challenges to data centers and other industrial facilities. A flurry of litigation battles over fair use in training AI models is requiring a closer look at diligence considerations and risk management calculations, while funds and companies that look to train models on non-public data in the search for a competitive AI advantage are likely to face a thicket of rights limitations and contractual issues. And national security regimes related to U.S. economic interests continue to expand in the face of evolving geopolitical concerns, creating an increasingly complex regulatory landscape for inbound investment.
We hope you find the 2026 Private Equity Outlook to be a useful summary of both the positive developments and the new challenges shaping the market as you navigate the year ahead.