Private Equity: Navigating the Changing Landscape

Private equity has firmly established itself as a dominant force in global financial markets, managing unprecedented levels of capital and influencing major corporate and market dynamics. Yet, as the sector expands, it is also undergoing a profound transformation. While deal volume has slowed, the transactions that do take place are becoming larger and more strategic. This reflects not only rising valuations but also increasingly complex market conditions; shaped by regulatory pressures, evolving investor demands, and technological advancement. In this new era, PE is no longer just about capital deployment—it’s about navigating a sophisticated ecosystem of opportunities, risks, and evolving investment structures.

Navigating Regulatory and Data Challenges

The regulatory environment governing private equity has never been more complex. As institutional investors demand greater transparency, fund managers must adapt to evolving compliance standards and increasingly sophisticated reporting frameworks. The rise of regulations concerning tax structures, anti-money laundering (AML), and Know Your Customer (KYC) compliance has intensified the scrutiny on PE firms. For firms seeking to gain a competitive edge, compliance is no longer a burdensome obligation but an opportunity to embed operational excellence within their business model.

Emerging Trends Reshaping the Industry 

The landscape of private equity deal-making is shifting, not just in terms of volume, but in complexity, structure, and investor behavior. According to McKinsey’s Global Private Markets Report 2025, global deal value rebounded by 14% in 2024, with a growing share of transactions exceeding $500 million​. But this is not simply a return to pre-2022 norms. Instead, it's a reflection of how firms are concentrating capital into fewer, higher-value, and more strategic deals.

This consolidation is being driven in part by evolving LP sentiment. While investor appetite for private markets remains strong, caution has increased. LPs are eager to deploy capital, but they’re becoming far more selective; conducting deeper diligence, extending decision timelines, and demanding stronger fundamentals. As a result, only the most compelling and well-structured opportunities are getting funded, raising the bar for GPs seeking to close deals.

To navigate this environment, GPs are embracing more flexible and creative financing structures. In response to valuation gaps and economic uncertainty, firms are increasingly using preferred equity, seller notes, earnouts, and contingent payments to bridge bid-ask spreads and de-risk transactions. At the same time, a rise in distressed borrowers—especially in sectors facing prolonged headwinds—has led to a surge in bespoke workout activity, with private credit lenders working collaboratively to restructure deals and avoid covenant defaults​.

Together, these trends point to a more selective, sophisticated, and solutions-driven era of deal-making; one where scale, creativity, and discipline are essential.

At the same time, the traditional all-or-nothing liquidity model of private markets is being rethought in a recent episode of Dry Powder, Bain & Company’s private markets podcast. Rather than forcing investors to remain fully locked in or exit entirely via secondaries, a middle ground is emerging: partial liquidity options such as monthly redemptions and incremental rebalancing. These innovations mirror the flexibility of public markets, offering investors more control over their exposure while still preserving the long-term orientation of the asset class.

Beyond operational efficiency, this shift is beginning to transform and democratize private markets, broadening access and enabling value to be captured by a wider range of participants, not just large institutions. Powered by data and AI, these advancements are making private markets more transparent and accessible than ever before.

Alongside these structural shifts, technology has evolved from a supporting role to a strategic cornerstone in private equity. Today’s leading firms are embedding advanced tech across the investment lifecycle—from due diligence to portfolio monitoring—unlocking new levels of efficiency, insight, and agility. Artificial intelligence and big data analytics are now essential tools, enabling firms to rapidly process vast datasets, identify investment opportunities with greater precision, and monitor performance in real time. As covered in Bain & Company’s Dry Powder series, features like daily pricing, asset allocation tools, and real-time portfolio visibility—once tailored for retail investors—are increasingly expected in private markets. Institutional investors, while long-term by nature, are beginning to value these capabilities too, particularly as focus grows on risk management, portfolio construction, and the ability to rebalance exposure over time.

For GPs—especially mid-sized and boutique firms—this presents a critical choice. While large managers may have the resources to build technology in-house, doing so requires significant investment of time, capital, and ongoing internal expertise. Smaller firms, facing the same expectations from LPs, increasingly need to rely on third-party platforms to deliver the same level of sophistication. Solutions like bunch, offer a streamlined way to meet these demands; combining automation and operational support to cover the full fund lifecycle. Moving more parts of the service driven industry into technology and creating a transparent and accessible investor experience across all funds and strategies. Those that fall short may be forced to rely on LPs who prioritize performance over transparency; raising the bar even higher for consistent alpha generation.

Looking Ahead: The Next Generation of Private Equity

The firms that will define the next era of private equity won’t just manage capital, they’ll master complexity. In a market shaped by regulatory intensity, data overload, and shifting investor expectations, five priorities will separate the leaders from the rest:

1. Operational Scale Without Bloat

As funds become larger and more global, scalable infrastructure is no longer a nice-to-have. The most competitive firms are streamlining operations through automation, cloud platforms, and specialist outsourcing. Firms that embrace these changes will be able to deploy capital faster and report lower admin costs relative to peers​.

2. AI-Driven, Structured Data Systems

Investor expectations have shifted from quarterly updates to real-time visibility. With LPs seeking machine-readable reports and granular performance insights, scalable data architectures have become a strategic advantage. Firms must be able to leverage AI to streamline unstructured data and deliver financial information across complex portfolios at a faster pace.

3. Tech-Led Investment Intelligence

Artificial intelligence and machine learning are transforming how private equity firms source deals, underwrite risk, and generate value post-close. AI is being used to augment human decision-making at every stage of the investment lifecycle—from identifying high-potential targets through advanced pattern recognition, to optimizing operations within portfolio companies. The most forward-thinking GPs are integrating AI directly into portfolio company strategy—automating insights, identifying operational levers, and even informing product development initiatives.

4. Customization as the Default

Standardized reporting is dead. Institutional LPs now expect a personalized experience; reporting tailored to their mandates, exposures, and compliance needs. This isn’t just about better dashboards; it’s about building investor relationships through transparency and tech-enabled communication.

5. Value Creation That Outlasts Cycles

As entry multiples rise and exits get harder, GPs must generate value from operations, not just arbitrage. According to McKinsey and StepStone, more than 60% of PE returns from 2010 to 2022 came from leverage and multiple expansion. That playbook is closing. The next chapter is about growing revenue, expanding margins, and building resilience over longer holding periods.

Conclusion: The Shift from Capital to Capability

Private equity is entering a more demanding, more sophisticated era. It’s no longer just about deploying capital—it’s about building resilient ecosystems around it. Technology, data, and operational sophistication are no longer competitive edges; they're prerequisites.

Firms that thrive in this environment will be those that balance scale with precision, leverage digital tools without losing human judgment, and commit to long-term value creation amid short-term volatility. The fog is lifting, as McKinsey puts it. What’s emerging is a clearer view of what success in private equity will truly require: sharper tools, smarter strategies, and a relentless focus on performance built to last.

‍