Sponsors in 2026 are navigating persistent uncertainty and a shifting macroeconomic environment. Although dealmaking began to recover in 2025, sponsors contend with sticky inflation, uneven labor markets, and elevated geopolitical risk.
Solomon Partners’ Financial Sponsors Trend Report explores the macroeconomic, capital markets, and sector-specific forces shaping private equity activity today, while offering a forward-looking perspective on where dealmaking, exits, and fundraising may head next.
Trends Shaping Private Equity Markets
Our Financial Sponsors team explores the critical trends influencing private equity decision-making across the investment lifecycle, including:
- Mixed macro & sticky inflation: Labor markets remain uneven despite stable unemployment (4.4%), with ~92k nonfarm payroll jobs lost in Feb’26. While GDP growth remains solid (2.2% in FY’25), core PCE continues to exceed the Fed’s target, and rising tensions with Iran could drive oil prices higher, adding inflationary pressure.
- AI risk weighs on investors: Sponsors are increasingly evaluating AI implications across existing portfolio companies and new investments, as technological disruption and productivity gains begin to influence underwriting and exits.
- Secondaries gaining traction: Continuation vehicle (“CV”) volume increased 29% YoY through Oct’25 YTD, alleviating exit pressure. As traditional exit paths normalize, CV activity may moderate but should remain a viable option for long-dated, high-quality assets.
- IPO market reopening: U.S. PE-backed IPO exit value reached $141.4B in FY’25 (23x higher vs. FY’22), signaling renewed market appetite and improving capital markets, though government shutdown delays, persistent inflation, and rising AI-related risks may temper the pace of recovery.
- Challenged fundraising: U.S. PE capital raised fell 27% YoY and fund count fell 51% YoY in FY’25, extending the fundraising slowdown. LPs continue consolidating commitments into larger managers, with the top 10 funds capturing >45% of Oct’25 YTD capital raised (vs. 35% in FY’24).
- Policy & regulatory environment: Potential tailwinds from tax policy & tariff-related rulings entering 2026 are offset by continued regulatory scrutiny from the SEC and FTC.
PE Spotlight: Financial Institutions M&A
This report includes a spotlight on Solomon’s Financial Institutions Group (FIG), highlighting private equity trends across insurance, banking, and financial services. Despite lower deal counts, PE-backed transaction values increased materially in 2025, reflecting a shift toward fewer, higher-value transactions amid improving profitability and long-term consolidation themes.
Read the full Financial Sponsors Trend Report for deeper insights and takeaways on where private equity is headed in 2026.
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