Private markets continued to attract capital and conquered economic uncertainty in 2025. Full-year deal count didn’t surpass 2024 figures, but 2025 PE deal value reached $1.2 trillion — the second-highest total on record after 2021, according to PitchBook. U.S. private equity exits experienced double-digit growth last year, resulting in ~1,619 exits valued at $728.1 billion.
Heading into 2026, sentiment has returned to cautious optimism. Many expect fundraising to continue to concentrate among top managers, especially as manager consolidation accelerates. Deal activity is starting to thaw as the U.S. benefits from lower interest rates, and improving exit activity may ease fundraising challenges.
Read on to see how current market conditions are shaping the 2026 private equity trends — and how those trends are reshaping the market.
Trend 1: The ongoing GP-LP evolution
The GP-LP relationship shift continues into 2026. LPs are more selective, more demanding, and more willing to push for bespoke side letter terms. LPs have “exercised that power through negotiating leverage and documents have gotten longer and more complex,” Ontra CEO Troy Pospisil told Private Funds CFO.
In a tough fundraising environment, GPs have to win commitments by offering transparency, timely data, and, in some cases, fee concessions. Smaller GPs may feel that pressure most acutely.
What this means operationally: If your side letter process still runs on inboxes and spreadsheets, you’re absorbing risk and losing speed. Private markets firms are increasingly prioritizing AI-powered technology to standardize workflows and reduce the day-to-day burden of side letter compliance.
Trend 2: Data visibility is essential
Data visibility is a core driver of the shifting GP-LP dynamic. LPs aren’t passive — they want to understand performance, attribution, and decision-making in near real time.
That expectation forces GPs to deliver more detail, more frequently, and with less friction — and many firms are struggling to keep up. Firms relying on legacy processes to manage bespoke reporting requirements need to close the gap fast, whether through an AI-powered platform or streamlined workflows.
What this means operationally: Visibility isn’t a “nice to have.” It’s a trust requirement. Teams that build a repeatable reporting engine — with clear ownership, controls, and a single source of truth — will be better positioned to retain LP confidence.
Trend 3: AI expectations and mixed feelings
AI is becoming table stakes, and LPs are paying attention to how GPs deploy it. In Private Equity International’s LP Perspectives 2026 Survey, 47% of LPs said they were very or somewhat closely monitoring how their GPs adopt AI in investment and operational processes. While about a third viewed AI positively, 46% reported mixed views due to risk concerns.
Where does that leave the industry? Adoption will continue, but scrutiny will rise. As Ontra CEO Troy Pospisil put it, “AI is a critical ingredient, but it’s not a panacea.”
Knowing LPs are watching, fund managers have to be clear-eyed about where AI helps — and where it introduces unacceptable exposure. Learn more from Ontra’s 2025 webinar, AI Done Right (and Wrong), featuring panelists from Blackstone, Gallatin, and Proskauer. “Start with clear orientation of the articulation of success, clear alignment, and buy-in [from] the business,” said Matt Katz, Senior Managing Director and Global Head of Data Science at Blackstone. “That is the surest way to ensure that you have success.”
What this means operationally: Treat AI like any material operational change: define success, put governance in place, and keep humans in the loop for judgment calls. And be prepared to explain your approach — including security and controls — in LP diligence.
Trend 4: Slightly less risk-averse LPs
LP caution appears to be easing, but it hasn’t disappeared. Morgan Stanley’s Private Equity 2026 Outlook reported that M&A activity is recovering in a “less onerous” financing environment. Inflation has slowed, the Federal Reserve lowered interest rates, and macro conditions look more stable.
Advisory firm Walker & Dunlop observed that LPs have become less risk-averse and are re-engaging with opportunities. Still, LPs remain discerning when selecting GPs and committing to new strategies.
What this means operationally: More conversations don’t automatically translate into new capital commitments. The firms that move capital efficiently will be the ones that can respond quickly to diligence, reporting, and compliance requests without reinventing the wheel each time.
Trend 5: GP consolidation continues
GP consolidation isn’t emerging — it’s accelerating. In 2024, U.S. private equity bought more asset managers than ever before, with most transactions involving controlling strategic stakes, according to PitchBook. Fund managers are using acquisitions to build AUM, expand into new strategies, and broaden investor reach.
Even with private markets growth, the trajectory points to fewer, larger platforms. KKR CFO Robert Lewin and Apollo President Jim Zelter have both noted consolidation dynamics. Axios reported that the leaders separately addressed consolidation at the Barclays Global Financial Services Conference in 2025.
For large GPs, consolidation increases operational complexity and compliance burdens. “These big managers that now have 15–20 strategies and sub-strategies in each of their verticals — that’s incredibly complicated to manage,” said Jeff Smith, Principal Account Director, Growth Sales, at Ontra. “The firms that lay a good foundation, adopt good, targeted AI, are going to be materially better off.”
What this means operationally: Post-merger integration isn’t just about systems. It’s policy alignment, contract language consistency, and controls. Firms that standardize processes early will reduce integration drag — and avoid compounding risk.
Trend 6: Rising popularity of a 4th exit option
Continuation vehicles and other GP-led secondaries are no longer niche. Continuation funds are now a common exit option alongside traditional sales and IPOs, offering GPs a way to provide liquidity while buying time to drive additional value.
But continuation vehicles introduce real complexity. Alignment across GPs, LPs, and secondary investors matters — as do clear, consistent valuation practices. Differing expectations can create conflict and, in a rare example, lead to litigation in late 2025.
What this means operationally: More bespoke structures mean more bespoke terms — and more documentation. Teams need tighter playbooks, clearer approvals, and a reliable way to track obligations over time.
Trend 7: Retail investors are arriving
The democratization of private markets is pulling in retail investors — a large, underserved pool of capital. Private fund managers are developing products for the retail segment, and 401(k) participants may gain access to private investment vehicles.
The retail opportunity comes with legal and regulatory consequences. Fiduciary duties can look very different across institutional and retail channels, Seyfarth Shaw warns. Advisory services provider Kroll has noted the impact on valuation methods and timing.
What this means operationally: To scale responsibly, fund managers will need stronger governance, clearer disclosures, and tighter coordination across legal, compliance, IR, and operations teams.
Dive into more private equity trends
Many of these 2026 trends connect directly to side letter complexity — longer documents, more bespoke terms, and higher expectations for transparency and compliance. Discover the 9 side letter trends impacting GPs’ legal, compliance, and governance processes.
