NextWave Private Equity · 2026-07-28 · 9 min
Key moments - from our scoring
Substance score
45 / 100
Five dimensions, 20 points each
Pete Witte, Global Insights Lead for Private Equity at EY, walks through the Q2 2026 PE market using Peter Drucker's framework that the danger in turbulence is acting with yesterday's logic. The headline shows mixed signals: PE acquisitions fell 10% year-over-year while total deal value stayed flat, masking a significant bifurcation. Tech deals collapsed from $70 billion to $35 billion (a 50% decline), with tech's share of PE deployment shrinking from 35% to 11%, while healthcare, industrials, consumer, energy, and utilities all grew. This reflects a fundamental shift in sponsor priorities - away from speed-and-scale optimization toward resilience in the face of geopolitical uncertainty, supply chain disruption, and technological change. EY's GP survey reveals the hottest sectors: healthcare services (50% of GPs), digital infrastructure and AI power generation (44%), alongside semiconductors and AI hardware. Exit activity accelerated with values up 10%, driven by corporate trade buyers (now 70% of exits), resurgent IPO appetite, and seller pragmatism - 90% of GPs willing to accept discounts, many in the 6-10% range. The critical insight for exit success: starting preparation 12-24 months ahead dramatically outperforms last-minute efforts. For operators, this signals a market rewarding operational expertise, long-term thematic focus on resilience, and early, rigorous exit planning.
Tech deals fell from $70 billion to $35 billion (50% decline) as PE sponsors raised the bar for tech investments amid AI-driven uncertainty about long-term business models and valuations, causing tech's share of PE deployment to collapse from 35% to 11% while other sectors rotated up.
Healthcare services (cited by 50% of GPs), digital infrastructure (44%), utilities, aerospace, defense, and industrials top the list, with particular interest in the full AI value chain including power generation, semiconductors, and AI hardware supply chain - not just data centers.
Over 70% of exits now go to trade buyers, up from the typical two-thirds share, as corporates gain confidence in M&A activity and boards become more active in transactions.
90% of GPs said they would accept some discount, with the most common range being 6-10%, and about 25% willing to accept even larger discounts than that.
Companies that start exit preparation 12-24 months before their exit demonstrate demonstrably better outcomes than those who start 3-6 months ahead, with buyers increasingly unwilling to accept pro forma metrics.
Our reviewer’s read on each dimension, with quotes from the episode.
The episode delivers a solid mix of quantified market observations and trend analysis - tech deals dropped 50%, exits up 10%, 90% of GPs accept discounts - that would be useful to a PE operator. However, significant portions consist of predictable framing (Drucker quote, discussion of 'resilience,' generic sector rotation language) and lacks actionable depth on *why* these shifts matter operationally or how to capitalize on them.
Overall, PE acquisitions fell by about 10% in the first half of this year versus the first half of last year. Total deal value stayed roughly flat over the same period. But that's hiding some pretty interesting nuances. Specifically that there were about $70 billion worth of tech deals at this time last year and only about 35 billion in the first half of this year.
90% of the folks that we talk to said that they would accept some level of discount, with the most common response being in the 6 to 10% range.
The framework - AI disruption requiring 'resilience' over 'speed and scale,' sector rotation out of tech - is already well-circulated in PE discourse by mid-2026. The observation that PE is rotating to healthcare, utilities, and infrastructure is sensible but not contrarian or fresh. No first-principles rethinking or counterintuitive claims emerge.
the bar for tech deals has gotten higher and we're seeing rotation into sectors that are supported by stronger secular demand and very clear value creation opportunities.
For most of the last two decades, investors have really rewarded businesses that were optimized for speed, scale, cost, asset like business models. For example, today they're increasingly rewarding businesses that can perform through geopolitical uncertainty, supply chain disruption and significant technological change.
This is a solo EY insights lead delivering a quarterly market summary, not a practising PE operator or founder with direct portfolio experience. Pete Witte is a professional analyst/commentator rather than someone who has built and exited companies or run a fund through cycles. This lacks the credibility of a working GP or operator.
My name is Pete Witte, and I'm, um, the Global Insights lead for private equity here at ey.
we run a survey of PEGPs. They're located across the world and this quarter we asked them
The episode includes concrete numbers - $70B tech deals down to $35B, tech allocation down from 35% to 11%, 50% of GPs focused on healthcare, 44% on digital infrastructure, 72% expecting deployment to increase, 90% willing to accept discounts in the 6 - 10% range - and references a multi-part study on exit readiness. However, no named company examples, no specific deal case studies, and no granular timelines or dollar figures tied to real transactions.
tech was about 35% of PE deployment by value, first half of it. This year it's about 11%.
50% of the GPs that we talked to cited this as one of their top three areas for growth. Others, uh, included utilities, aerospace, defense industrials, Digital infrastructure, probably not surprisingly, jumped out as well. 44% of the GPS listed this as one of their top three spaces
This is a monologue by a single speaker with no back-and-forth dialogue, push-back, or genuine interview dynamic. There are no pointed questions, no challenging follow-ups, and no exploration of tensions or disagreements. The format is a prepared commentary read to an audience, not a conversation.
My name is Pete Witte, and I'm, um, the Global Insights lead for private equity here at ey. And over the next few minutes, we'll talk through some of the major themes that we're seeing in the private equity market
And we'll start this one with one of my favorite quotes from Peter Drucker
Computed from the transcript - who did the talking, and the words that came up most.
Private equity firms remained active but selective in the first half of 2026 as market uncertainty continued to influence investment decisions. While technology-focused transactions declined year over year, non-technology sectors saw continued growth, highlighting a shift toward resilient assets. Exit activity remained steady, supported by trade sales and ongoing corporate demand. Looking ahead, GPs remain optimistic, with most expecting both investment activity and exits to accelerate over the next six months. All data contained in this document is sourced from Dealogic and EY analysis unless otherwise noted. For detailed findings, please visit ey.com/pepulse To explore the EY Exit Readiness Study, please visit ey.com/PEexitstudy
Transcribed and scored by The B2B Podcast Index.
Speaker A: The Global PE Pulse Podcast from ey.
Speaker B: Hi, everyone, and welcome to the July edition of the PE Pulse Podcast. My name is Pete Witte, and I'm, um, the Global Insights lead for private equity here at ey. And over the next few minutes, we'll talk through some of the major themes that we're seeing in the private equity market, including trends and our outlook for the deal environment, the past quarter's themes and areas of focus. And then we'll close with our outlook for the next few months. Thanks everybody, for joining. And let's get started.
Speaker A: This quarter's deals, environment, acquisitions, exits and financing.
Speaker B: And we'll start this one with one of my favorite quotes from Peter Drucker, which is the greatest danger in times of turbulence isn't actually the turbulence. It's acting with yesterday's logic. And I think that's a really good descriptor of what we're seeing in PE right now. We're not. Remember, we're talking about an industry that holds companies for four, five, six years or more. And right now, in particular, as AI starts to reshape large parts of the economy, it's really hard to have a good view of what the world is going to look like over that timeframe. A lot of the paradigms that have defined investing for the last two decades are in the middle of rolling over right now, and that's leading to a lot more selectivity across wide swaths of the market. So with that as our starting point, let's talk about some of the things that we're seeing now. Overall, PE acquisitions fell by about 10% in the first half of this year versus the first half of last year. Total deal value stayed roughly flat over the same period. But that's hiding some pretty interesting nuances. Specifically that there were about $70 billion worth of tech deals at this time last year and only about 35 billion in the first half of this year.
Speaker A: So.
Speaker B: So decline, obviously about 50%. At the same time, the value of everything else, healthcare, consumer industrials, energy, and so on down the line, the value of that increased by just under 10%. So when we talk about some of the softness that we're seeing in the market, it's really important to recognize the degree to which a lot of what we're talking about is really focused on the software space. To put this another way, two years ago, tech was about 35% of PE deployment by value, first half of it. This year it's about 11%. So we're really seeing a bit of a bifurcation in the market right now where the bar for tech deals has gotten higher and we're seeing rotation into sectors that are supported by stronger secular demand and very clear value creation opportunities. You know, one of the recurring themes that came out of this year's Super Return in Berlin, for example, was this focus on resilience as one of the defining characteristics that sponsors are looking for in their new investments. For most of the last two decades, investors have really rewarded businesses that were optimized for speed, scale, cost, asset like business models. For example, today they're increasingly rewarding businesses that can perform through geopolitical uncertainty, supply chain disruption and significant technological change. And in a lot of respects, our latest survey results reinforce a lot of those observations. So once a quarter we go out, we run a survey of PEGPs. They're located across the world and this quarter we asked them, what sectors are you more focused on than usual? Healthcare services jumped out. 50% of the GPs that we talked to cited this as one of their top three areas for growth. Others, uh, included utilities, aerospace, defense industrials, Digital infrastructure, probably not surprisingly, jumped out as well. 44% of the GPS listed this as one of their top three spaces for future investment. And what's interesting is that while the data centers themselves get all the attention, we're really seeing interest across the full breadth of the AI opportunity set. One third of the folks that we talked to, for example, listed power generation as one of their leading themes. Infrastructure and transmission equipment was also called out as a leading space alongside semiconductors and the AI hardware supply chain. Same with software and services that support AI infrastructure. So just this widening set of investable themes up and down the AI value chain.
Speaker A: This quarter's key market themes and fund priorities.
Speaker B: Now let's talk about some of the past quarter's themes and areas of focus. And what's still on everybody's mind is liquidity. And what we see here is a pretty steady market for exits. Exit values were up just under 10% in the first half of this year versus the first half of last year. And that's really being driven by a few things. Now. The first is that corporates continue to be active buyers for PE backed assets. In a typical quarter, trade sales account for about two thirds of exit by value. And then the rest is, you know, sponsored, sponsored deals, IPOs. But over the last six months, that share of corporate activity has moved higher where now more than 70% of exits are going to trade buyers. As trade buyers get more confident in the M, UM and A markets, boards get more active in transactions the second is the IPO market. After several years of subdued issuance, Investor appetite for IPOs is back and there's a strong pipeline of candidates that are waiting to go public. In addition to the megadeals, we've also seen, uh, several high profile sponsorback deals price really well and perform well in the aftermarket in recent quarters. And that's leading to increased confidence in that as an excerpt out. And then the third is, call it increasing pragmatism amongst sellers with respect to pricing. As part of our survey this quarter, we asked folks to think about an asset that had been held in their portfolio for longer than they'd expected and to think about what kind of a discount relative to their original underwriting they might be willing to take. 90% of the folks that we talk to said that they would accept some level of discount, with the most common response being in the 6 to 10% range. And a notable minority, about 25%, said that they would take a, uh, discount that was even larger than that. But regardless of the route, what's really important here is being fully exit ready. You know, we know that the window is opening and closing very quickly. That's just been the market for the last few years. And we recently conducted a study around some of the best practices in exit ratedness. And you can get more details on this on our website. But as part of that we went out, we talked to 100 GPs about what works well, what doesn't work well, best practices. We also talked to 100 management teams of recently exited portfolio companies to get their view as well. And what's really clear here is that the earlier you start, the better off you are. Companies that started a year or two before their exit have demonstrably better outcomes than those who start three to six months ahead of time. Buyers are a lot less willing to accept pro forma metrics these days. And so getting the data right, getting the reporting in order, giving the management team time to prepare and get ready, and making sure that they can articulate the equity story, all of that matters more than ever.
Speaker A: Outlook for the next six to 12 months.
Speaker B: Now, ah, we know that periods of dislocation, whether it's macro, geopolitical, technological, can create some interesting opportunities for PE. Right now, 72% of GPs say that they expect deployment activity to increase over the next six months. 56% expect exits to accelerate over the same period. Just 14% expect exits to decline from where they are right now. So there's a good deal of optimism out there now. Valuation mismatches, interest rates, geopolitical consideration. They're all headwinds, right? Roughly 7 in 10 respondents identified each as at least somewhat of a headwind but at the same time that's being offset by more assets that are coming to market from PE sponsors and corporates as well as a uh, fairly accommodative financing markets and some of the aforementioned AI led opportunities. So when we think about the real takeaways for this quarter it's that the sources of competitive advantage are changing and the firms that are able to be flexible and adapt, whether that's by increasing AI, strengthening their operational value creation capabilities, investing behind long term themes that are based around resilience, those are the ones that are going to be well positioned for the coming years. As always we'll continue to track how this evolves, but thanks for listening and looking forward to sharing more in our next update.
Speaker A: The Global PE Pulse Pulse podcast from EY back next quarter. For more on the latest market Trends go to ey.compePulse.
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