Private Equity Firms Raise Record Dry Powder Amid Anticipation of 2026 Deal Surge
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Private equity firms are sitting on unprecedented levels of uncommitted capital—commonly known as dry powder—as they position for what many expect to be a robust wave of dealmaking in 2026.
Industry data compiled by Preqin shows global private equity dry powder surpassing $3.2 trillion as of December, with buyout funds alone holding more than $1.1 trillion ready to deploy. The figure has grown steadily despite a relatively subdued 2025 for transactions.
High interest rates and valuation mismatches between buyers and sellers kept activity muted this year, but falling borrowing costs and improving economic visibility are fueling optimism.
“2025 was a year of preparation—resetting portfolios, managing debt maturities, and building liquidity,” said one partner at a mega-fund speaking anonymously. “Now we’re seeing sponsors aggressively pursuing new platforms.”
Fundraising has remained resilient, with several large managers closing oversized vehicles in recent months. Blackstone, KKR, and Apollo all reported strong investor commitments, drawn by the asset class’s historical outperformance during rate-cutting cycles.
Corporate carve-outs, take-private transactions, and continuation funds are expected to dominate next year’s pipeline. Sectors like technology, healthcare, and industrials are particular areas of focus.
The looming maturity wall for private credit loans—estimated at over $1 trillion coming due in the next three years—is also seen as a catalyst. Many companies will need fresh equity injections to refinance, creating opportunities for PE firms.
Competition for quality assets remains fierce, however, pushing valuations higher in competitive processes. “We’re being very selective,” noted another industry source. “Discipline is key after the easy-money era.”
Limited partners—institutional investors like pension funds and sovereign wealth funds—are encouraging deployment while maintaining strict governance standards post recent scandals.
Regulatory scrutiny has increased, particularly around fee transparency and co-investment practices. New SEC rules implemented this year have added compliance burdens but also professionalized the industry further.
For public markets, a pickup in PE activity could provide a tailwind through increased IPO and exit volumes. The backlog of privately held unicorns and mature companies is substantial.
As 2025 draws to a close, the stage appears set for a meaningful rebound in global M&A and leveraged buyouts—one that could redefine corporate ownership landscapes in the years ahead.
