Private equity outlook Q2 2026: from recalibration to opportunity
By Nils Rode, Chief Investment Officer, Private Markets at Schroders Capital
With the asset class having gone through a historic slowdown in fundraising, deal and exit activity – and as renewed global volatility threatens to delay the recovery – we see continued opportunities and attractive entry points for disciplined, long-term investors.
Our Q2 2026 investment outlook finds that private equity remains in a period of recalibration, which should translate into selective opportunity for investors – although the fallout from the Iran conflict may delay a broader recovery.
Key takeaways:
- Private equity is experiencing its longest downturn on record, surpassing all prior cyclical troughs, with fundraising, deal and exit activity remaining below post-pandemic peaks.
- Two tentative recoveries - in late 2024 and the second half of 2025 - were both interrupted by macroeconomic shocks, first US tariff volatility and then conflict in the Middle East driving a spike in global energy prices.
- Despite near-term headwinds, slower fundraising cycles have historically preceded attractive investment vintages, creating opportunities for disciplined, long-term investors.
- Small and mid-market buyouts remain attractively priced, with entry multiples approximately 40% below large buyouts and 55% below comparable public small-cap benchmarks, supported by lower leverage and greater scope for operational value creation.
- Secondary deal volumes reached a record in excess of $200 billion in 2025, with continuation vehicles growing faster than previously forecast and presenting opportunities particularly in less crowded mid-market segments.
- Venture capital dynamics are highly divergent: late-stage valuations have surged to new highs driven by AI-related investment, while early-stage markets offer a more measured recovery and biotechnology remains a contrarian opportunity.
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