Bain & Co.’s 2026 private equity report presents some very positive numbers – and some very challenging questions about the present and future structure of the asset class.
It quotes Dealogic figures for solid increases in deal and exit value last year compared with 2024, respectively up 44% to $904 billion, and up 47% to $717 billion. And 13 of those were mega deals of $10 billion or more.
But that strength sits alongside stubbornly low distributions and difficult fundraising. Above all “low prices, cheap debt, and easy multiple expansion are gone for the foreseeable future”, Bain says.
The report lays out past and current structures of deals over the last ten years. A 2015 buyout typically consisted of half the purchase price borrowed at 6%-7% interest while underlying macro growth delivered some 2.5-times multiple on invested capital over five years from just under 5% EBITDA growth.
Now, however, borrowing costs are at 8%-9% and leverage ratios at 30%-40%, with deal prices largely much higher. As of 2025, a typical buyout had to achieve at least 10%-12% EBITDA growth over five years to deliver that 2.5-times return.
According to Bain, most general partners will have to “substantially” raise their value creation game. Additionally, “the industry has changed structurally in ways that are making it dramatically harder to compete than it was only a few years ago”.
The winners in 2025 were the largest buyout firms, often aided by sovereign wealth funds and other leading limited partners.
“It will only get harder to generate both acceptable returns and strong distributions to paid-in capital,” Bain says.
This might also make for an overdue dose of honesty in the private equity industry.
The business transformation and value enhancement case was historically one of private equity’s major justifying arguments in front of regulators, competition authorities, as well as investors. But the historic numbers from Bain suggest that relatively little work was being done in that area versus the overall return on the investment.
Now, more and more private equity firms will have to work harder to actually improve the businesses they invest in. They can no longer gain a lot by only improving a little. That can surely only be good.
