After years of elevated interest rates and muted deal activity, which left buyout firms holding aging portfolio companies longer than expected, private equity may finally be entering the exit window it has been waiting for.

Goldman Sachs says improving capital markets and a surge in strategic acquisitions are setting the stage for a broader release of pent-up private equity exits.

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The firm’s latest 2H 2026 Global M&A Outlook paints a more optimistic picture for financial sponsors, even as it argues that investors are becoming far more selective about which assets deserve premium valuations.

Private markets remain under pressure from historically weak distributions, with Goldman estimating buyout firms are sitting on roughly 16,000 companies that have been held for more than four years — representing more than half of all buyout-backed portfolio companies. That backlog has intensified pressure from limited partners demanding liquidity after several years of muted exits.

M&A Rebound Could Unlock a Wave of Delayed Exits

"We’re seeing a fundamental shift where boardrooms view inaction as the ultimate risk — proactively pursuing transformative transactions despite persistent macroeconomic headwinds," said Stephan Feldgoise, global head of M&A.

Instead of deploying capital broadly, Goldman says sponsors are increasingly concentrating investments around take-private transactions, founder-led leveraged buyouts and industry consolidation plays while looking for multiple paths to return capital.

The improving backdrop comes as global M&A activity rebounds sharply. 

Goldman said first-half global deal volume climbed 48% year over year, surpassing the previous record set in 2021, with mega-deals accounting for much of the increase. Nearly half of more than 500 corporate and financial sponsor clients surveyed said current market conditions make them more willing to pursue acquisitions.

IPO Markets, Strategic Buyers Offer New Paths to Liquidity

For private equity, that recovery could help unlock long-delayed exits.

Goldman pointed to several recent transactions — including SpaceX’s $85.7 billion IPO, INNIO’s  $2.7 billion public listing and the merger between KONE and TK Elevator — as evidence that both IPOs and strategic combinations are becoming viable exit routes again. The bank expects private equity distribution rates to gradually recover toward historical norms as M&A activity accelerates.

But the report also suggests the next phase of private markets will look very different from the last decade.

Rather than rewarding growth at any price, buyers are increasingly distinguishing between businesses positioned to benefit from artificial intelligence and those vulnerable to disruption.

AI Is Creating a New Divide Between Winners and Losers

Goldman argues AI is creating a “flight to quality” across private markets, with durable, cash-generating businesses and hard-asset companies likely to command stronger valuations, while assets facing technological disruption could see mounting pricing pressure.

The firm noted private markets now account for roughly 30% of global software exposure, making sponsor portfolios particularly exposed to the AI reshuffling underway across enterprise technology.

At the same time, sponsors are embracing more creative liquidity strategies beyond traditional sales and IPOs.

Continuation vehicles and other structured transactions are becoming increasingly mainstream, allowing firms to return capital to investors while retaining ownership of their highest-conviction assets, according to Goldman.

The report also highlights a sharp increase in corporate portfolio reshaping, with global separation activity running 145% above the 2021-2025 average, creating additional acquisition opportunities for financial sponsors as companies divest noncore businesses.

The Biggest Risk For Dealmakers May Be Waiting Too Long

Goldman concludes that the biggest risk for dealmakers is no longer volatility itself but failing to act despite it.

As strategic buyers race to acquire AI capabilities and private equity firms face mounting pressure to generate liquidity, the bank argues that boardrooms increasingly view inaction as a greater risk than pursuing complex transactions in an uncertain macroeconomic environment.

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