From Recalibration to Opportunity: Why Q2 2026 Is the Best Entry Point for Private Equity in Three Years
bIAnk AI Research · May 2026 · 9 min
KPMG, Schroders Capital and PwC converge on a single message for Q2 2026: deal volumes softened on geopolitical shock but values stayed resilient, exits are reopening, and entry multiples are at a three-year low. For disciplined sponsors and LPs, the entry window is now.
Q1 2026 opened with cautious optimism that was briefly interrupted by the Middle East flare-up, according to KPMG's Pulse of Private Equity. Deal count dipped MoM but global value was up ~21% YoY, signaling that capital is concentrating in larger, higher-quality assets. Ropes & Gray's May Dealmaker's Digest confirms the same pattern across April announcements.
Schroders Capital's Q2 2026 outlook frames this as a transition "from recalibration to opportunity". Three forces converge: (1) record dry powder still in excess of USD 2.4 trillion, (2) gradual normalization of exit markets via continuation vehicles and sponsor-to-sponsor sales, and (3) entry multiples in the mid-market that have compressed 1.5-2.0x EBITDA versus 2021 peaks.
Sector-wise, the most attractive setups are tech-enabled services (validated by SAP/Dremio at USD undisclosed and IBM/HashiCorp at USD 6.4bn), healthcare diagnostics (Roche/PathAI, May 7) and energy infrastructure (Keyera/Plains NGL at USD 5.3bn, closed May 12). Each combines defensible cash flows with clear strategic-buyer demand at exit.
For LPs, secondaries pricing has firmed meaningfully: LP-led NAV discounts narrowed to ~7-9% from 14-16% twelve months ago, while GP-led continuation funds are clearing at par for top-quartile assets. This re-rating directly improves the IRR math on net-new commitments to 2026 vintages.
Risks remain. Carlsquare and Foley & Lardner both flag a "constrained capital environment" with selective debt markets and elongated processes (median time-to-sign in EU mid-market is 6.8 months vs 4.9 in 2021). Disciplined underwriting — particularly around revenue durability and exit optionality — separates 2026-vintage winners from late-cycle losers.
Key takeaways
- Q1 2026 global PE deal value +21% YoY despite MoM volume softening (KPMG)
- Dry powder still >$2.4T; exit markets reopening via continuation vehicles and S2S sales
- Mid-market entry multiples 1.5-2.0x EBITDA below 2021 peaks (Schroders Capital Q2 2026)
- LP-led secondary discounts narrow to 7-9%; GP-led continuation funds clearing at par