When Market Corrections Create Opportunity
Private equity performance is closely tied to entry conditions. Funds raised and deployed after periods of market stress have often benefited from lower entry valuations and improved long-term return potential, particularly once public markets stabilize and exit conditions normalize. As noted by J.P. Morgan, private equity’s long-term outperformance has often followed periods of public market volatility and dislocation, when pricing discipline and selectivity tend to improve.[4]
Deal pricing reflects this adjustment. According to PitchBook, private equity deal multiples in North America and Europe have moderated as financing costs increased, leading to a more restrained pricing environment compared to peak-cycle levels. While this shift weighed on activity in the short term, it also reset entry valuations following several years of elevated pricing.[5]
For investors allocating capital in 2026, this reset matters. Acquiring high-quality businesses at fair prices, rather than competing aggressively at market peaks, has long been a driver of long-term private equity outcomes.
Capital Is Ready To Move
Despite slower deployment in recent years, private equity firms are not short on capital. Far from it. According to S&P Global Market Intelligence, global private equity dry powder stood at around $2.18 trillion in early 2025, near recent record levels, reflecting a substantial reserve of capital ready to be deployed.[6] In an environment where significant capital is competing for a finite pool of high-quality opportunities, access and relationships increasingly influence which investors secure the most attractive assets.
As valuation gaps narrow and financing conditions stabilize, this capital is beginning to move. EY’s Q3 2025 Private Equity Pulse highlights stronger deal activity and narrowing valuation gaps between buyers and sellers; indicating growing willingness among sponsors to transact as pricing expectations realign.[7]
This dynamic matters for two reasons. First, it supports a recovery in deal activity across buyouts, growth equity, and carve-outs. Second, it creates urgency among managers to deploy capital with discipline rather than delay decisions indefinitely. For investors, this environment can expand opportunity sets and support renewed momentum across the asset class.
Secondaries Move Into The Spotlight
One of the clearest structural shifts in today’s market is the growing role of private equity secondaries. Secondaries involve acquiring existing fund interests or portfolios from other investors, often at a discount to net asset value. In periods of reduced liquidity and slower traditional exit activity, this segment tends to expand as investors seek portfolio rebalancing or earlier distributions.
According to Jefferies, global secondary market transaction volume reached a record‐high $162 billion in 2024, up about 45 % from the prior year’s levels and surpassing the previous 2021 peak.[8] This reflects robust activity as sponsors and investors seek liquidity and portfolio optimization.
For investors, secondaries offer distinct advantages. They provide immediate diversification, reduced blind-pool risk, and often earlier cash flow compared to primary commitments. By acquiring interests in funds already seasoned through part of their value-creation journey, secondaries can also help soften the traditional J-curve associated with private equity investing.
These dynamics have elevated secondaries from a tactical solution to a more strategic component of private market portfolios. Secondaries remain a practical entry point for investors seeking diversification, flexibility, and targeted exposure within private markets.
At The Family Office, this approach is reflected in our Secondary Marketplace, a client-driven platform that enables investors to buy and sell private market positions with one another across selected strategies, supporting portfolio management across different stages of the investment lifecycle.
Manager Selection Matters More Than Ever
Private equity has always been a market of dispersion. The gap between top-performing and lower-performing managers is materially wider than in most public asset classes.
According to Blackstone, the performance gap between top-quartile and bottom-quartile private equity managers is significantly larger than in public equities or credit, often reaching double-digit differences in annualized returns.[9] In recovery phases, this gap can widen further as stronger managers capitalize on market dislocations while weaker ones struggle with legacy portfolios, higher financing costs, or limited access to new opportunities.
This makes manager selection critical. Access, experience, and underwriting discipline play a decisive role in outcomes, particularly in environments shaped by tighter financing and selective growth.
At The Family Office, private equity is approached as part of a broader portfolio strategy rather than a standalone allocation. Emphasis is placed on manager quality, alignment, and the ability to execute across market cycles, especially when conditions demand patience and precision.
A Market Aligned For Long-Term Investors
The window following a market reset does not remain open indefinitely. As confidence returns and competition increases, pricing tends to move higher and entry advantages narrow.
Private equity is not immune to uncertainty, nor does it offer guaranteed outcomes. Yet history shows that entering the asset class after periods of correction, with discipline and selectivity, has often rewarded patient capital.
As markets recalibrate, the focus shifts toward thoughtful preparation. The question is less about timing the cycle perfectly and more about building exposure with the right partners, strategies, and expectations for the years ahead.
