For several years, private equity has operated in an environment defined by macroeconomic and geopolitical shocks, constrained activity and shifting valuation expectations. The 2026 Global private equity report from Forvis Mazars indicates that this phase is gradually giving way to a more stable, if selective, market backdrop.
Market conditions are described as entering a period of cautious stabilisation. Deal-making activity, which had been subdued, is beginning to return in a more disciplined and selective form. Buyers and sellers are slowly narrowing valuation gaps, enabling transactions to move forward on more realistic terms.
Technology, including artificial intelligence, is increasingly embedded in decision-making processes, supporting both investment selection and portfolio management. However, the report underlines that experienced judgement remains central. As interest rates stabilise, private equity firms are adapting their approaches, reshaping their strategies and preparing for a more constructive environment for 2026 and beyond.
Navigating selective market stabilization
Stabilisation does not mean the disappearance of risk. On the contrary, the report highlights the specific pressures that continue to weigh on portfolio performance:
67% of private equity leaders identify market and geopolitical uncertainty as a key challenge.
48% cite operational complexity.
23% point to misalignment with management.
In response, firms are adapting their investment strategies. Growth capital remains the dominant strategy globally, with 73% of respondents focused on growth investments. This is well ahead of leveraged buyouts, cited by 49%. This preference reflects a continued focus on strategies that support expansion while preserving flexibility in a higher-cost capital environment.
The overall picture is one of cautious confidence. Portfolio outcomes show continuity rather than disruption, broadly in line with the previous year’s survey, with a modest reduction in underperformance at exit compared with 2025.
Redefining performance and value creation
As market conditions stabilise unevenly, private equity firms are adapting strategies, capital structures and time horizons to operate effectively in a more complex demanding environment. While capital remains abundant, it’s now harder to deploy. The report identifies an ongoing imbalance between capital availability and deployable opportunities. Dry powder levels remain high, yet firms cite difficulty finding assets that meet return expectations. Competition for high quality assets is also intense, and underwriting discipline is rising.
73% of respondents prioritise growth capital strategies, compared to 49% for leveraged buyouts.
Financing constraints have increased, with 58% of firms reporting build up strategies affected, up 10 points from 2025.
Most firms say they would have walked away from fewer than 10% of past deals, signalling both increased confidence and heightened selectivity.
With exits taking longer and deployment more cautious, value creation is increasingly shaped by operational depth and differentiation, rather than by market momentum alone. Firms are focusing more on what happens during the ownership period: improving operations, refining strategy and supporting sustainable growth over longer holding periods.
Technology overtakes financial services as top investment target
Sector focus is also evolving. A notable shift in the 2026 findings is the rise of technology as a primary driver of investment activity.
TMT is now the most frequently targeted sector globally, at 58%, just surpassing financial services at 57%.
Investors emphasise the importance of technology-enabled capabilities to support portfolio resilience and scalable growth.
Sector focus and specialisation are emerging as increasingly important differentiators in a competitive deal environment.
This is not simply a sector rotation. Technology is becoming integral to how private equity creates value: from digitalising portfolio companies and strengthening data capabilities, to enhancing risk management and operational efficiency. The report suggests that technology is moving from a supporting role to a central pillar of investment strategy.
Operational depth and longer holding periods redefine value creation
With exit markets more complex and valuations slower to re-align, private equity firms are relying more heavily on operational improvements and strategic repositioning to generate returns.
“The 2026 Forvis Mazars Global private equity market outlook, based on insights from over 800 private equity professionals across six regions, points to a sector moving beyond disruption toward disciplined execution, technology-enabled value creation and cross-border growth.”
The data underscores shows:
Portfolio performance appears weaker at year three but improves significantly at exit, underscoring the importance of later-cycle value creation.
Extended holding periods are now structural, driven by financing constraints and stalled M&A processes.
69% of firms are extending fund lifecycles to manage fundraising pressures, up from 54% in 2025.
Growth increasingly depends on international expansion, with most firms reporting value creation driven by a mix of domestic and cross-border strategies.
This combination of longer holding periods, greater operational intensity and international expansion is redefining what successful private equity looks like. Value creation is less about timing the cycle and more about building resilient, scalable businesses over time.
The central role of cross-border growth
International investment remains a core driver of portfolio growth. Most firms report that they are achieving growth in both domestic and cross-border markets, with cross-border strategies particularly important for the most active investors.
This reflects a view that opportunities for value creation increasingly lie in accessing new markets, talent pools and customer bases beyond a single domestic economy. Cross-border strategies are being embedded into portfolio plans, not treated as optional extras.
For firms able to manage regulatory, geopolitical and operational complexity across jurisdictions, this international dimension is a powerful lever for both diversification and growth.
Conclusion
Taken together, the findings of the Forvis Mazars private equity report 2026 describe an industry entering a more measured, performance-driven cycle after an extended period of disruption.
Several themes stand out:
Investment strategies are becoming more execution focused, with firms prioritising control, operational influence and clearly defined value creation levers over scale or deal volume.
Portfolio performance shows continuity rather than disruption, with outcomes broadly in line with last year’s survey and a modest reduction in underperformance at exit compared with 2025.
Financing conditions are shaping capital deployment, influencing build-up strategies, capital structures and exit timing across regions.
International investment remains a core driver of portfolio growth, with cross-border strategies being particularly important for active investors.
Technology-led investment has now moved to the forefront globally, with TMT now the most frequently targeted sector, reflecting the growing importance of digital capability and sector specialisation.
As markets stabilise, the report clearly outlines the new direction being explored in private equity investment.
The firms best positioned for this environment will be those that can articulate a compelling, credible investment strategy, deploy capital selectively and deliver consistently against their value-creation plans.
In a more selective and performance-driven cycle, success will depend less on the volume of capital raised and more on the clarity of strategy and the quality of execution.
