Private equity investments were considered selective last year, with price being an apparent issue mitigating against deal flow.   Perhaps also a lack of sufficient cash-outs constrained available capital. Optimism prevailed at the start of 2026, although to me there did not seem to be any objective indicator.  And indeed through the 26th of June, it was reported that over 3,600 PE deals totaled over $735 billion.

But according to several leading PE attorneys, as reported in the Law360 information service, a sense of caution prevailed, characterized by one as a “strangeness in the market.”  It seems that different opinions as to enterprise value was a major factor.  The impacts of this factor are these: use of co-investment vehicles, more roll-overs for some seller equity, and an increase in earnouts (see my June 30 post as to earn-out usage).  Buyers are using their leverage in fixing such structuring.

There is also activity by secondary funds creating liquidity for prior investors, so-called “continuation funds.”  Whether such activity will in turn free up capital to drive new investments is unclear to me, however.

While real estate and defense deals seem to be robust (no surprise as to the latter given state of the world), current anticipation seems to be continued calm in the second half of the year.  One reason may have to do with the elections, in my view, a point not noted in the reportage.  Perhaps people are just unsure about a large number of things, and that leads to inertia.