Cherry Bekaert's Mid-year PE Report: Sponsors Deploy $461 Billion While Shifting Toward Smaller Deals

Cherry Bekaert (the Firm) has released its Mid-year Private Equity (PE) Industry Report, showing sponsors deployed an estimated $461 billion during the first half of 2026, down 10.6% from the same period in 2025. Despite lower deal value, transaction volume remained largely intact as sponsors continued pursuing smaller platform deals and add-on acquisitions.

Featuring data from Pitchbook and other industry sources, along with proprietary Firm insights, the report analyzes the PE mergers and acquisitions landscape through June 30, highlighting the trends influencing dealmaking, exits and fundraising across the industry.

The report identifies three significant forces that shaped market activity during the second quarter:

• Higher-for-longer interest rates, as the Federal Reserve maintained a restrictive rate environment despite expectations for cuts earlier in the year
• An energy-driven inflation shock, tied to the conflict in Iran and its impact on energy markets
• Growing AI-related valuation risk, as sponsors evaluated how artificial intelligence could alter the competitive position and future value of acquisition targets and portfolio companies

Together, these dynamics weighed on transaction value while leaving overall deal volume largely intact.

Key findings from the report include:

• Sponsors closed an estimated 2,384 transactions in the second quarter, essentially flat from the prior quarter and 11.5% higher year over year.
• Transactions exceeding $2.5 billion generated just $25.9 billion across five deals, down 59.7% year over year, while add-on acquisitions accounted for approximately three-quarters of all buyout activity.
• Software deal value fell to an estimated $10.7 billion, down 65.7% year over year, while energy deal value increased 80.5% year to date amid datacenter-driven power demand.
• Exit value declined 46.3% sequentially to $102.6 billion, with PE-backed company inventory rising to 13,509 businesses.
• Initial public offerings increased 42.2% sequentially to $27.6 billion as the number of offerings doubled to 12.
• Dry powder remained elevated at approximately $1.07 trillion, reflecting significant capital waiting to be deployed.

"Each of the three shocks landed on the same question: what is this business worth when we sell it?" says Scott Moss, Partner and Financial Services Industry Leader. "Sponsors have underwritten through higher-for-longer interest rates before. What they have not had to underwrite is a competitive position that AI can fundamentally alter during a hold period. As a result, sponsors gravitated toward opportunities they could confidently price and evaluate."

Looking ahead, the report expects market activity to remain uneven, with carve-outs and take-private transactions continuing to support deal flow while liquidity solutions and private credit evolve alongside changing market conditions.

For insights into the trends expected to shape PE activity through the remainder of 2026, read the full report here.