Dry Powder: The Private Equity Podcast

Bain & Company’s Global Private Equity Report 2026: Executive Summary

Host: Hugh MacArthur, Chairman of Bain & Company’s Global Private Equity practice
Date: February 23, 2026

Episode Overview

This episode features Hugh MacArthur presenting an executive summary of Bain & Company’s 2026 Global Private Equity Report. With private equity markets showing initial signs of recovery after several turbulent years, Hugh examines whether this momentum is widespread and sustainable. He explores deal and exit activity, fundraising dynamics, return trends, and asserts the industry is at a crucial inflection point—demanding new, sharper strategies for future winners.

Key Discussion Points and Insights

Signs of Recovery—But For Whom?

• 2025 Data Highlights:

  • Over $900 billion in deal activity (second highest ever after 2021) (01:16)
  • $700 billion in exits (one of the best years)
  • $1.3 trillion raised for all private asset classes (equal to 2024 levels)
  • Despite these large figures, actual deal count down by 6% and exit count down by 2% (03:43)
    • A handful of megadeals, including the largest ever ($57 billion take private of EA), made up the difference.

• Insight:

  • The top end of the market (biggest players, largest funds) are benefiting most from the recovery, while smaller firms and deals remain under pressure.
  • “Very few deals actually soaked up a lot of that capital in terms of the total enterprise value that was being deployed in 2025.” – Hugh MacArthur (04:52)

Fundraising Landscape: Flat on the Surface, Tumultuous Underneath

• Big Picture:

  • All-alternatives fundraising flat at $1.3 trillion in 2025.
  • Buyout fundraising, however, was down 16% due to ongoing liquidity constraints for institutional investors (09:22).

• Sectoral Trends:

  • Infrastructure: Strong inflows thanks to durable, cash-yield investments and AI-driven demand for energy/data centers.
  • Secondaries: Explosive growth—over $200 billion in deal flow, reflecting the “liquidity solutions” trend.
    • “The secondary business that provided $200 billion plus worth of deal flow, which by the way was an all-time record...” (13:17)

Returns: Headwinds and Context

• Buyout returns remained robust for deals that found exits, but the industry struggles with insufficient liquidity events for many LPs.
• U.S. stock market comparison:
  • S&P 500 10-year returns now match those in private equity, but are skewed by a narrow set of outperforming "Mag 7" tech stocks.
    • “If 17 stocks are driving 75% of my return, can I bet on that for the next five or 10 years?” (16:44)
  • Diversification argument: Private equity offers portfolio balance as public markets become shallower.

The Inflection Point: “12 is the New 5”

• Key Concept:

  • To generate a 20% IRR, annual EBITDA growth in buyouts now needs to average 12% versus 5% a decade ago (19:00).
    • Driven by higher debt costs, less available leverage, and entry/exit multiples.

• Industry Maturity and New Realities:

  • The benign era of zero rates “masked the maturation of the industry.”
  • Now, prices and competition are up—winning requires distinct strategic edge.
    • “It is pricey out there...cost is up. Raising capital has gotten more expensive...” (24:22)

• Cost and Revenue Pressures:

  • GPs face rising operational and fundraising expenses, while increased “co-invest” structures put pressure on revenue (fees).
  • “Co-invest is about $1 of every $3 raised to be put to work. … Fees [do] not go up commensurately.” (27:20)

Strategic Imperatives for GPs

What Does Industry Maturity Mean for Strategy?

• Three-fold Competition:

  • GPs now compete for:
    1. Talent
    2. Capital
    3. Deals (29:45)

• Strategy Requirements:

  • Must be differentiated, repeatable, and protected by "moats."
  • “You need a repeatable, differentiated model in order to succeed, with real moats built around it...” (33:10)

Practical Shifts in Behavior

• Proactive Sourcing:
  • Build pipelines of desired assets years ahead, not just passively screening deals.
  • “I need to begin building my own pipeline of assets that I want to own, perhaps years before those assets come to market...” (36:05)
• Integrated Underwriting:
  • Full potential due diligence now includes operational, commercial, and technological (especially AI) assessments.
  • Day one value creation plans are essential for speed to EBITDA growth.
• Execution Muscle:
  • GPs must execute value creation plans immediately; slow value creation at high prices is riskier than ever.
  • “Time is your enemy. There's a lot of change in the macro economy...the faster you get EBITDA wins on the table, the faster you're on the path to successful returns and generating alpha.” (39:13)

Notable Quotes & Memorable Moments

• On Market Concentration:

  • "If 17 stocks are driving 75% of my return, can I bet on that for the next five or 10 years?" – Hugh MacArthur (16:44)

• On Liquidity and Fundraising:

  • "Having a fourth straight year, which is unprecedented by the way, of it being less than 15% [distributions to NAV] is really straining most LPs’ ability to recommit to the industry..." (08:50)

• On the Industry's Inflection Point:

  • “We're saying at Bain that 12 is the new 5.” (19:00)

• On New GP Strategy Requirements:

  • “The time has come for every GP to boldly state its ambition and then to create real plans to achieve a strategy that allows access successfully to all three of those things: talent, deals, and capital.” (32:05)

• On Value Creation:

  • “The faster you get EBITDA wins on the table, the faster you're on the path to successful returns and generating alpha.” (39:13)

Timestamps for Key Segments

• [01:16] – 2025 private equity activity: deals and exits
• [03:43] – Decline in deal and exit volume despite large sums
• [09:22] – Fundraising landscape and buyout-specific woes
• [13:17] – Secondaries explosion and need for more liquidity solutions
• [16:44] – Public vs. private equity returns (and concentration risk)
• [19:00] – Industry inflection point: "12 is the new 5"
• [24:22] – Rising costs for GPs across the board
• [27:20] – Revenue pressures from co-investment structures
• [29:45] – The three competition fronts for GPs
• [32:05] – Strategic shift required for long-term success
• [36:05] – Proactive sourcing and deal preparation
• [39:13] – Imperative for immediate value creation post-close

Tone and Language

Hugh MacArthur delivers the report with a blend of cautious optimism and pragmatic realism, urging listeners to embrace complexity, nuance, and the need for thoughtful, active strategies. He frequently supports his arguments with data, sector anecdotes, and analogies (“duck on the pond”), speaking directly to private equity professionals who must adapt to a changing environment.

Summary Takeaways

• The industry shows signs of recovery but only for those able to deploy large amounts of capital—a trend marked by fewer, larger deals.
• Headline fundraising looks stable, but buyout fundraising—and thus, much of the traditional market—is under continued stress.
• Returns remain relatively strong, but public markets are a tougher benchmark, and industry “maturity” means winners must differentiate more proactively.
• “12 is the new 5”: required growth and operational performance expectations for GPs are higher than ever.
• All GPs must now compete aggressively for talent, capital, and deals; clear strategy and value creation capability are minimum requirements for success.
• Speed, specialization, AI-driven diligence, and proactive sourcing are emerging as best practices.

For those interested in deeper analysis, a full report and global webinar are available via the episode notes.