Private Equity Faces Tight Competition for Quality Deals — BDO Report

CHICAGO--(BUSINESS WIRE)--BDO’s 2026 Private Equity survey reveals a market where an overabundance of dry powder is chasing too few quality assets, with 82% of respondents expecting deal prices to increase as a result of tighter competition. In response, firms are rethinking how they differentiate themselves to close deals.

To understand how PE firms are navigating heightened competition, lengthening hold periods, and the impact of artificial intelligence, BDO USA polled 400 U.S. private equity fund managers, deal partners, and operating partners about their top strategies, challenges and priorities for the year ahead.

The survey illustrates an industry adapting to change by reimagining deal selection criteria and processes, value creation strategies, and the ways in which firms build convincing business cases for the next owner.

Report Highlights

• Funds Anticipate Deal Prices on the Rise: 82% of respondents expect deal prices to increase during the next 12 months, driven by tight competition and a shortage of quality assets relative to available dry powder.
• Pricing Gaps Continue to Drive Extend Hold Periods: 80% of respondents report holding portfolio companies for five years or longer as firms seek acceptable returns from long-held assets. Many firms are broadening their approach to portfolio-company performance in response.
• AI is Increasingly Central to Transactions: 94% of respondents report that AI is fundamentally reshaping their investment thesis, with firms applying it in every stage of the deal lifecycle — from sourcing to exit. PE firms are coming to sellers with well-defined business plans for growth, partnering with management and winning the deal.
• Reliance on Private Credit Remains Steady: 41% of firms, a plurality, list private credit as their primary funding source, underscoring their desire for additional flexibility in light of pricing pressures, deal competition, and speed to deal closure.
• Talent Stands as a Top Barrier to Deal Execution: 48% of respondents say finding and retaining the right people at the fund and portfolio company level is their biggest limitation when trying to execute deals at speed. Lasting success will require more than just finding the right target.
• Funds Express Cautious Optimism Around IPOs: 87% of respondents say IPOs will become more attractive in the next 12 months, with a large amount of that excitement driven by large, long-anticipated listings.
• Larger Funds See Emerging Opportunities in Take-Privates: 88% of respondents say take-private transactions will be more attractive in the next 12 months. For funds with the balance sheets and scale to pursue them, these transactions offer an alternative to hyper-competitive private-to-private auctions.

"The private equity firms that will achieve success over the next few years will be the ones taking a proactive approach right now. They are reshaping their investment strategy in a data driven world, investing capital in new growth platforms with staying power, identifying value enhancing add-on acquisition opportunities, developing and incentivizing their people to execute at speed, and exiting with outsized returns on a timely basis,” said Patrick Donoghue, Private Equity National Leader and Managing Principal, BDO.

To learn more about the outlook for private equity in 2027, download the 2026 BDO Private Equity Survey or visit our website.

Methodology
BDO’s 2026 Private Equity Survey polled 400 U.S. PE fund managers and operating partners in May 2026 to understand their strategies as well as the opportunities and challenges on the horizon for the next 12 months. The survey was conducted by Rabin Roberts Research.

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