Published: July 27, 2026 | Category: Private Equity / Markets
Private equity dealmaking cooled on both entry and exit in the second quarter, according to a preliminary read of the data from PitchBook. The firm says the megadeal frenzy of recent quarters has “slowed to a crawl”, while year-to-date exits are pacing roughly in line with 2025 — undercutting an industry hope that 2026 would deliver a stronger market for selling assets.
The combination is the uncomfortable part. Buyout firms are finding it harder to deploy capital into large new transactions at the same time as they struggle to return cash to investors through exits, a dual squeeze that tends to feed through into fundraising and valuations later in the cycle.
Exits matter because they are how private equity pays its own backers. Pension funds, endowments and other limited partners commit capital on the expectation of distributions when portfolio companies are sold or floated. The metric those investors now watch most closely is DPI, or distributions to paid-in capital — the share of their money actually returned in cash rather than marked up on paper. When exit markets stall, DPI stalls with them.
That is where the pressure becomes circular. Limited partners fund new commitments largely out of the proceeds of old ones, so a slow exit market leaves them with less cash to recycle. They re-up in smaller size, or not at all, and managers find their next fundraising harder even when reported returns look healthy. A portfolio can show attractive paper gains and still leave its backers short of the cash they were promised. Some managers have leaned on continuation funds and loans secured against portfolio value to manufacture liquidity, but those tools postpone the reckoning rather than resolve it, and limited partners have grown wary of paying fees on assets that never quite sell.
The stall has a cause on the entry side too. Higher-for-longer interest rates have kept the cost of leverage up and widened the gap between what sellers will accept and what buyers will pay, freezing the largest transactions where that gap matters most. Until that bid-ask spread narrows, both new megadeals and clean exits stay scarce — which is precisely the pattern the quarter’s numbers describe.
The figures come with a caveat. This is PitchBook’s first, single-source look at the quarter rather than a final tally, and the numbers could be revised as more deals are recorded. Even so, the direction of travel is the story. A market that had been counting on a busier second half is entering it without the momentum it wanted, and the firms most exposed are those that raised large funds at the top of the cycle and now have to put that money to work and hand cash back at the same time.
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