According to a Deloitte survey, the private equity market is set for a split in 2026. While overall sentiment remains positive, dealmaking will be defined by a divergence between mega-deals and a resurgent mid-market. This shift follows a year of volatility and uncertainty, with rising interest rates and geopolitical tensions impacting the investment climate.

The report indicates that deal volumes may remain flat, suggesting opportunities are concentrated in smaller and mid-sized transactions. These could benefit from pent-up demand as corporate sellers seek liquidity. Despite challenging financing conditions, capital availability remains a supporting factor, though there is a growing caution around leverage and potential default risks.

Technology, particularly AI, is becoming a key tool for PE investors. Most respondents reported active AI use across the M&A lifecycle. Furthermore, private equity is becoming more domestically focused, with cross-border dealmaking declining due to geopolitical risks. Adaptability will be the defining theme for 2026.

Private equity firms will need to be agile and disciplined to succeed. Firms that focus on execution rather than scale may find greater opportunities. This comes as the market grapples with economic uncertainty and shifts in strategy. The focus on the mid-market could lead to more deals in the coming year.