Thought Leaders: Private Equity Dry Powder May Drive Mergers and Acquisitions in 2026

Private equity financing is frequently an attractive option for funding mergers and acquisitions, and industry experts are predicting that significant amounts of “dry powder” held by private equity companies will be deployed in 2026. This article discusses what dry powder is in the private equity context, what industry experts are predicting will happen with dry powder in 2026, and how dry powder may affect mergers and acquisitions in 2026. 

The term “dry powder” refers to uncalled capital committed by limited partners (LPs) to private equity funds and is typically measured in aggregate across the entire global private equity industry. The contractual agreements that govern these funds often define a set window of time in which dry powder must be deployed.

According to Pitchbook, a private equity data specialist, “[c]losed-end private capital funds globally held $4.63 trillion of dry powder at the end of Q2 2025, up $201.5 billion, or 4.6%, from year-end 2024.” This massive buildup of dry powder has been effectively sitting on the sidelines during the economic uncertainty of the past year and a half. The amount of sidelined dry powder combined with approaching deadlines for funds to use that money is anticipated by industry experts to increase pressure on fund managers to deploy that capital quickly. In other words, private equity firms are fervently looking for investment opportunities to close quickly, which is anticipated to generate increased merger and acquisition activity in 2026. 

If you are a business owner considering taking some money off the table, seeking to sell your business, or looking for some capital to grow your business, now might be a good time to  look to private equity as a buyer or growth capital provider. However, the pressure on fund managers to deploy their dry powder quickly may result in compressed transaction timelines that may reduce the time available for buyers and sellers to negotiate deal points, conduct due diligence, and increase the pressure and stress of engaging in such a transaction. For all these reasons, it is important to involve third-party experts, including legal counsel, early in the process to enhance negotiating power and mitigate business risks.

If you’re  considering private equity as a growth capital partner or purchaser of your business, contact BHGR’s Corporate Group today.

This article is informational only. The presentation or use of this information does not in any manner constitute an attorney-client relationship between BHGR and the website user. While the information on this site concerns legal issues, it is not intended as legal advice and is not a substitute for particularized advice from your own legal counsel.