Key Takeaways
- • Global secondary transaction volume reached a record USD240 billion in 2025, up 48 percent year over year, according to Jefferies Private Capital Advisory, with William Blair projecting USD250 billion for 2026.
- • Global private equity fundraising recovered only modestly to approximately USD780 billion in 2025, well below the USD1.1 trillion peak in 2021, and the number of funds closing declined in the first half of 2026 even as aggregate dollars rose 9 percent.
- • Continuation vehicles have become the primary liquidity mechanism for sponsors, with closed CV volume rising 34 percent in North America in 2025, while investor scrutiny of sponsor conflicts of interest is intensifying.
- • Private credit, at roughly USD1.5 to USD2 trillion, now rivals the broadly syndicated loan market, and covenant-lite deals rose to 21 percent of direct lending in 2025 from 4 percent in 2023.
- • The SEC is scrutinizing NAV loans and subscription lines, and evergreen funds with net expense ratios above three percent face performance and fee concerns as the 401(k) access push advances.
Summary
The US private equity industry enters the second half of 2026 shaped by structural change, regulatory recalibration, and the maturation of alternative strategies, according to a client alert published by JD Supra on October 5, 2026. Fundraising remains constrained relative to the 2021 peak, while secondary transactions, continuation vehicles and private credit have expanded considerably.
Secondary markets reached unprecedented scale in 2025, with transaction volume of USD240 billion, according to Jefferies Private Capital Advisory. Sponsor-led buyout volume rose from USD58 billion to USD81 billion, a 39 percent increase, and dry powder allocated to secondary strategies reached USD327 billion. Jefferies forecasts annual volume could approach USD300 billion within 12 to 24 months. Continuation vehicles have become, in the words of one advisory firm, the primary liquidity mechanism for sponsors facing a muted exit environment. Only 14 private equity-backed IPOs priced in Q1 2026, compared with 29 in Q1 2025. Sponsors increasingly invested alongside their flagship funds, with 37 percent of continuation funds involving such commitments in 2025, up from 23 percent in 2024. Investors are demanding stronger disclosure on conflicts and valuation.
Private credit has grown into a dominant force, with direct lending of approximately USD1.5 to USD2 trillion now matching the broadly syndicated loan market. Covenant-lite transactions rose to 21 percent of direct lending deals in 2025, and the top 25 managers accounted for roughly 72 percent of total fundraising. J.P. Morgan has reportedly earmarked USD50 billion for private-credit-style lending.
Fundraising recovered modestly to approximately USD780 billion globally in 2025, and for US-focused managers 2025 was the weakest year since 2020. Distributions to paid-in capital have become a defining metric, with investors overallocated to private equity and fundraising timelines lengthening.
The regulatory backdrop is shifting. An August 2025 Executive Order, "Democratizing Access to Alternative Assets for 401(k) Investors," was followed in March 2026 by a Department of Labor proposed safe-harbor rule that would let plan sponsors add evergreen funds to 401(k) menus. The SEC has signaled scrutiny of NAV loans and subscription lines, focusing on disclosure accuracy and valuation integrity.
Secondary markets reached unprecedented scale in 2025, with transaction volume of USD240 billion, according to Jefferies Private Capital Advisory. Sponsor-led buyout volume rose from USD58 billion to USD81 billion, a 39 percent increase, and dry powder allocated to secondary strategies reached USD327 billion. Jefferies forecasts annual volume could approach USD300 billion within 12 to 24 months. Continuation vehicles have become, in the words of one advisory firm, the primary liquidity mechanism for sponsors facing a muted exit environment. Only 14 private equity-backed IPOs priced in Q1 2026, compared with 29 in Q1 2025. Sponsors increasingly invested alongside their flagship funds, with 37 percent of continuation funds involving such commitments in 2025, up from 23 percent in 2024. Investors are demanding stronger disclosure on conflicts and valuation.
Private credit has grown into a dominant force, with direct lending of approximately USD1.5 to USD2 trillion now matching the broadly syndicated loan market. Covenant-lite transactions rose to 21 percent of direct lending deals in 2025, and the top 25 managers accounted for roughly 72 percent of total fundraising. J.P. Morgan has reportedly earmarked USD50 billion for private-credit-style lending.
Fundraising recovered modestly to approximately USD780 billion globally in 2025, and for US-focused managers 2025 was the weakest year since 2020. Distributions to paid-in capital have become a defining metric, with investors overallocated to private equity and fundraising timelines lengthening.
The regulatory backdrop is shifting. An August 2025 Executive Order, "Democratizing Access to Alternative Assets for 401(k) Investors," was followed in March 2026 by a Department of Labor proposed safe-harbor rule that would let plan sponsors add evergreen funds to 401(k) menus. The SEC has signaled scrutiny of NAV loans and subscription lines, focusing on disclosure accuracy and valuation integrity.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.