Q1’26 Pulse of Private Equity — U.S. and global investment trends
A KPMG quarterly analysis of global private equity activity
Overview
The first quarter of 2026 began with optimism for the private equity market, as detailed in KPMG's Pulse of Private Equity Q1 2026 report, but quickly faced renewed geopolitical and macroeconomic headwinds. Both the US and global markets experienced a notable dichotomy: while overall deal values remained relatively resilient due to high-conviction, large-scale transactions, the actual volume of deals dropped significantly to multi-year lows. Investors worldwide shifted their focus toward strategic sectors, particularly energy and infrastructure, driven by the booming demands of the AI ecosystem.
In the US, private equity activity saw a solid $228 billion in investment, though deal volume plummeted to a five-year low of 8,536 rolling transactions. Investors concentrated heavily on a few massive, high-quality deals, highlighted by a $41 billion take-private of clean energy firm AES. Facing extended holding periods and constrained exit markets due to fluctuating interest rates and inflation risks, US sponsors increasingly relied on add-on transactions. These smaller, strategic acquisitions became a primary lever for value creation, particularly in fragmented healthcare and tech sectors.
Globally, the PE market recorded $436 billion in announced deal value, with the Americas capturing the largest share, followed by the EMA region. Similar to the US, global deal volume weakened considerably, dropping to its lowest level since early 2021. Geopolitical tensions sparked concerns over oil prices and inflation, prompting investors to remain highly selective. Consequently, global capital flowed heavily into AI-adjacent infrastructure, with energy, climate tech, and logistics sectors trending ahead of their previous annual paces to support future technological growth.
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Q1 2026 Pulse of Private Equity report
Download PDFU.S. insights
1
PE market activity in the US remains concentrated on high-conviction deals
In Q1, US private equity saw $228 billion in investment, though the 12-month rolling total dipped to $1.12 trillion. Quarterly volume remained subdued at 1,811 transactions, pushing the annual count to a five-year low of 8,536. Capital concentrated on select mega-deals, led by the $41 billion AES buyout, alongside take-privates of OneStream and Clear Channel.
2
Geopolitical and macroeconomic uncertainties strengthen in Q1’26
Early Q1 optimism faded as tariff disputes and Middle East conflicts sparked energy market volatility. Simultaneously, resurfacing inflation risks delayed expected interest rate cuts. By quarter's end, these compounding hurdles clearly moderated PE activity. Mid-market and auction-driven processes were particularly impacted, as volatile public markets and fluctuating credit spreads complicated deal underwriting.
3
Add-on transactions a consistent play as PE investors focus on value creation
With exit markets constrained and holding periods extended, add-on transactions remained a consistent driver of US PE activity. Sponsors prioritized these smaller, executable deals as a primary value-creation lever to expand capabilities and geographic reach. Buy-and-build strategies surged in fragmented sectors like healthcare and B2B software, favoring scale efficiencies and operational consolidation.
4
AI increasingly driving where capital is going in the US, spurring more investment consortiums
Capital is aggressively flowing into US assets tied to AI demand and data infrastructure. The growing focus on these massive, complex transactions has sparked a significant revival of consortium deal structures. Private equity firms are increasingly teaming up with sovereign wealth funds and institutional investors to execute mega-deals too large for a single sponsor.
5
PE investment in automotive sector slow amid structural challenges; infrastructure sees a minor pause
The US technology, media, and telecom sector led Q1 private equity investment with $62 billion. Energy followed at $60 billion—the only sector outpacing its 2025 rate. Meanwhile, automotive investment plummeted to $3.3 billion amid EV transition and supply chain uncertainties. Infrastructure also experienced a brief pause, securing just $12 billion after a record 2025.
Trends to watch for in Q2’26
Heading into Q2’26, the US PE market will prioritize selectivity and scale over broad recovery. Despite ample dry powder, firms will target high-conviction mega-deals in infrastructure and energy. Geopolitical risks, inflation, and rate concerns are widening bid-ask spreads and extending timelines, prompting cautious underwriting and strict pricing discipline.
Infrastructure is increasingly becoming the new mega-buyout category, with assets linked to energy, digital infrastructure and data centers attracting the deepest pools of capital... [W]e’re seeing much greater use of consortiums... focused on ‘must-own’ assets where scarcity and strategic importance matter as much as financial returns.
Donald Zambarano
U.S. Head of Private Equity, KPMG in the U.S.
Global insights
1
Q1’26 starts with optimism
While an improving exit environment initially boosted global sentiment, sudden conflicts involving the US, Israel, and Iran triggered fresh anxieties regarding oil prices, inflation, and potential interest rate hikes. Despite these hurdles, transaction activity held steady across the US and EMA, though Asia lagged. With markets rebounding, investors maintain a positive outlook for the year.
2
Global PE investors remain selective in Q1’26 as deal volume falls further
Global PE deal value reached $436 billion in Q1, causing the 12-month rolling total to dip slightly to $2.1 trillion, though it remains historically high. However, deal volume remained weak, dropping to 19,682—the lowest since early 2021. This value-volume dichotomy underscores a continued focus on premium mega-deals, highlighted by massive buyouts of AES, InPost, and EGYM.
3
Americas attract largest share of PE funding globally, followed by the EMA region
The Americas led global PE funding in Q1 with $247 billion, driven heavily by the US. The EMA region followed with $154 billion, highlighted by the $9.2 billion InPost buyout, while ASPAC recorded $26 billion. Notably, 12-month rolling totals for both deal value and volume declined across all three major regions quarter-over-quarter.
4
PE investors focus on AI ecosystem plays, driving up investment in energy and infrastructure
While TMT captured the largest global share at $127 billion, it lags its 2025 trajectory. Instead, energy ($93 billion), climate tech ($50 billion), and infrastructure ($39 billion) are the only tracked industries outpacing last year's totals. This surge directly aligns with surging private equity demand for data centers and power generation supporting AI expansion.
5
Despite expectations, global PE exit activity remains subdued
Initial optimism for a recovering exit environment faded in Q1 amid rising geopolitical tensions. Global PE exits reached just $294 billion across 635 deals. While the 12-month rolling exit value dipped slightly to $1.2 trillion, volume plunged to a five-year low of 3,211 deals. Consequently, significant capital remains trapped in aging portfolio assets.
6
Median deal sizes continue to grow globally across deal types
By the end of Q1, median deal sizes reached record highs across all major transaction types. Buyouts surged to $142 million (up from $110 million in 2025), M&A jumped to $100 million (from $31 million), and growth rounds increased to $30 million. This size growth amid falling deal volumes underscores investors' laser focus on quality over quantity.
7
Rolling 12-month fundraising falls for the eighth consecutive quarter to lowest level since Q1’17
In Q1, the 12-month rolling total for global PE fundraising plummeted to its lowest level since early 2017, securing just $373 billion across 549 funds. This marks a significant drop from Q4's $421 billion. This sluggish environment stems from abundant existing dry powder and mounting pressure on sponsors to return capital to limited partners first.
8
Q1’26 deal value weakened as larger transactions faced greater pressure
Q1 private equity activity underperformed forecasts. While deal counts met expectations, deal values skewed toward pessimistic scenarios, indicating that rising geopolitical and market risks disproportionately hindered larger transactions. Although the outlook still points to improving momentum by year-end, Q1's shortfall reveals that caution, volatility, and slower execution weighed more heavily on the market than anticipated.
Trends to watch for in Q2’26
Heading into Q2, PE investment will target high-conviction, AI-adjacent assets and defense opportunities. While efforts to secure a lasting peace continue, outcomes and implications for global energy markets remain uncertain. Though oil and inflation risks persist, these dynamics should ultimately boost long-term interest in alternative energy infrastructure.
The global PE market continues to be bifurcated, with the largest and most strategic transactions in areas like AI, energy and infrastructure continuing to move forward... and other assets finding it difficult. Sponsors have a lot of dry powder, but... the market has shifted toward a more cautious, selective and price-disciplined posture.
Gavin Geminder
Global Head of Private Equity, KPMG International
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