Private Equity Midyear Report 2026 (Bain & Company)

Summary

• Average distributions as a percentage of NAV remain low, stretching the buyout industry's implied capital cycle to approximately 7 years.p.10
• A poll showed that a majority of LPs begin losing confidence in a GP when an exit discount to the last quarterly mark exceeds 5%.p.11
• MSCI analysis indicates that over 75% of buyout assets continue to exit above their next-to-final quarterly mark.p.13
• About 20% of LPs report reducing their buyout allocations during their strategic asset allocation process.p.14
• Generating a 2.5x target return over a 5-year holding period now requires 12% EBITDA growth, up from 5% a decade ago.p.14

Key insights

1. Investment, exit, and fund-raising activities slowed in the first half of 2026 following market disruptions including software AI concerns, private credit redemption stress, and the war in Iran.p.3
2. High purchase multiples combined with elevated financing costs have pushed the 'deal cost index' to record levels.p.8
3. Proprietary NDA activity data indicates that private equity deal activity will likely remain flat through July 2026 rather than experience a quick recovery.p.8
4. Most assets currently in buyout portfolios were acquired in 2021 or earlier and have experienced multiple market shocks.p.11
5. Final quarterly valuations for buyout assets tend to converge toward the expected clearing price prior to sale completion.p.11
6. Fund-raising momentum remains slow overall, typically lagging exit and distribution revivals by 12 to 18 months.p.13
7. LPs are exerting greater negotiating leverage, causing GPs to face higher costs in fees or coinvestment rights to secure fresh commitments.p.14
8. Achieving target returns now places a much greater emphasis on operational value creation and EBITDA growth over multiple expansion.p.14