Private Equity Firms Shift Focus to Efficiency and Specialization Amid Intense Competition

Private equity firms are increasingly competing on operational efficiency, specialized expertise, and strong relationships rather than sheer size, according to the "Private Capital Survey H2 26" by Termgrid. The findings suggest a market where execution, liquidity solutions, and operational technology are becoming paramount for competitive advantage.

The overall market climate remains cautious, with distinct differences in optimism between the EMEA region and the Americas. More than half (53%) expect non-bank lenders to continue gaining market share in fund financing, particularly in Europe.

Firms are differentiating themselves through expertise, with a focus on liquidity solutions and flexible deal terms for larger companies. Smaller companies are prioritizing specialized investment strategies and co-investment opportunities. Workflow automation is seen as a primary operational priority, surpassing artificial intelligence (AI), although only 16% of firms have integrated AI into their knowledge management systems.

The survey also indicates that continuation vehicles are expected to drive the next wave of liquidity solutions. Private equity firms face an evolving landscape where technological adoption, particularly AI integration, alongside operational excellence and strong client relationships, will be key differentiators.