PE Trends | M&A: proof, process & price

The new rules of PE M&A: proof, process and price

In a market shaped by AI disruption, selective bidders and valuation discipline, GPs need to prove resilience, curate buyer engagement and prioritise deliverable exits.

Summary

PE M&A markets are not going back to normal. GPs must transact in the face of volatility, not sidestep it.

• AI is all-pervasive. To get traction with bidders, GPs must prove that portfolio companies can defend against AI risk attack to capture the AI upside.
• Processes will have to be increasingly bespoke. Targeted, tighter positioning is essential, especially for “good but not exceptional” assets.
• GPs must give bidders opportunities to meet management ahead of a process and time to interrogate full data and diligence to build conviction.
• No bidder wants to be part of a large crowd.
• Deal deliverability and solid multiples today beat promises of peak valuations tomorrow.
• Trust, relationships and judgement matter more than ever to deliver optimum outcomes in uncertain markets.

The sell-off in software markets – dubbed the “SaaSpocalypse” – and Iran conflict shelved any lingering hopes that 2026 would, finally, be the year when PE deal markets returned to something resembling normal.

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“Holding out for the much-anticipated pent-up wave of M&A is not a feasible strategy.”

– Kate Gribbon, Head of Financial Sponsor Coverage & Origination

Pressure to sustain deployment and deliver distributions to LPs is intensifying. The best GPs recognise that success in today’s market requires proactive, innovative dealmaking.

Global exit value for Q1 2026 fell by a third quarter-on-quarter to $96 billion, according to Preqin, the lowest quarterly total since Q1 2024¹. PE firms waiting for economic conditions to improve may be waiting a long time. Those waiting for clarity on the impact of AI could be waiting even longer.

AI-driven disruption is forcing more active, strategic portfolio management. Managers that step back from dealmaking risk losing competitive position, missing exit windows and damaging LP confidence.

This is a moment to recalibrate strategies and reactivate M&A activity. 

We see the deal market evolving across three key dimensions: AI disruption, new ways of curating the deal process, and valuations.

Read more of Kate’s insights on how Private Equity firms can continue to deploy capital and execute exits in today’s market.