Private equity firms are facing intensifying competition for a limited pool of attractive assets, with 82% of US fund managers expecting deal prices to increase over the next year, according to a new survey from BDO.
The findings, based on responses from 400 US private equity fund managers, deal partners and operating partners, point to an industry adapting its investment and value creation strategies as firms contend with substantial levels of dry powder, longer holding periods and the growing influence of artificial intelligence.
The shortage of quality assets relative to available capital is expected to keep pressure on valuations, with the vast majority of respondents predicting higher acquisition prices over the next 12 months.
Longer ownership periods are also becoming increasingly common. Eighty per cent of respondents said their firms are holding portfolio companies for five years or more, as private equity managers seek to generate acceptable returns from investments amid a challenging exit environment.
The survey suggests that firms are consequently placing greater emphasis on improving the performance of existing portfolio companies and identifying additional avenues for value creation.
Artificial intelligence has become a major component of that process. Ninety-four per cent of respondents said AI is fundamentally changing their investment theses, with firms incorporating the technology throughout the investment lifecycle, from identifying potential targets and conducting due diligence through to portfolio management and exit planning.
Private equity firms are also increasingly approaching sellers with detailed plans for how they intend to develop a business after acquisition, according to BDO. This is allowing managers to compete on more than price in crowded auction processes by demonstrating their ability to work with management teams and execute growth strategies.
Private credit remains an important source of acquisition financing, with 41% of respondents identifying it as their primary funding source. The continued reliance on private lenders reflects demand for financing flexibility as buyers navigate elevated valuations, competitive deal processes and pressure to execute transactions quickly.
Human capital is another constraint. Nearly half of respondents, 48%, identified finding and retaining the right talent at both fund and portfolio-company level as their biggest limitation when attempting to execute deals at speed.
Meanwhile, private equity firms are becoming more optimistic about public-market exits. Eighty-seven per cent of respondents expect IPOs to become more attractive over the next year, with anticipated activity partly driven by a pipeline of large companies that have been preparing to go public.
Take-private transactions are also gaining appeal, particularly among larger funds with the capital and resources to pursue them. Eighty-eight per cent of respondents said take-privates would become more attractive over the next 12 months, offering larger managers an alternative to highly competitive private-to-private auctions.
Patrick Donoghue, BDO’s Private Equity National Leader and Managing Principal, said firms that adapt proactively will be better positioned to navigate the changing market, including by developing new growth platforms, pursuing add-on acquisitions and investing in talent and value creation capabilities.
The survey was conducted by Rabin Roberts Research in May 2026 and polled 400 US private equity fund managers and operating partners on their strategies, priorities and expectations for the following 12 months.
