PE Wins in Market's 'Blind Spots' for 2026 | Apollo PE Outlook

What's New

Apollo Global Management's 2026 Private Equity Outlook, authored by David Sambur and Matt Nord, Partners and Co-Heads of Equity, reveals that the biggest opportunities are emerging from market inefficiencies created by index crowding, capital stress, and neglected industrial assets—areas where disciplined buyers can exploit valuation gaps that passive investing has created.

Why It Matters

With public market valuations at dot-com-era extremes and a growing liquidity crunch forcing private equity managers to sell, 2026 presents a rare alignment of motivated sellers and mispriced assets that could reshape returns for investors who move decisively rather than waiting for perfect timing.

Big Picture Drivers

• Indexation distortion: Passive flows have detached prices from fundamentals, leaving non-thematic companies trading at "lowest common denominator" multiples despite durable cash flows

• Concentration risk: A handful of mega-cap leaders drove 2025 gains, creating potential for sharp reversals if momentum breaks

• DPI pressure: Years of muted exits have left LPs demanding distributions, forcing GPs into narrower sale processes

• Capital scarcity: Fundraising selectivity with GP demand outpacing LP supply, particularly in middle market

• Thematic overcrowding: AI and software narratives have starved tangible industrial assets of capital

By The Numbers

• ~40x: Shiller CAPE ratio, approaching dot-com-era extremes

• ~3.3x: S&P 500 price-to-sales ratio

• ~25%: S&P constituents trading above 10x sales

• 2025-2027: Recommended continuous deployment window to avoid weak vintage concentration

Key Trends to Watch

• Carve-out acceleration: Corporate parents are spinning off strong divisions at disciplined valuations, creating public-to-private opportunities.

• Secondary market expansion: Continuation vehicles and structured solutions will reward buyers offering speed and certainty at scale.

• Reindustrialization plays: Power systems, automation, logistics, and infrastructure assets tied to digital buildout offer cash flow today with optionality tomorrow.

• Hold period extension: Managers are increasingly trading IRR for higher TVPI when compounding favors continued ownership over exit.

The Wrap

Apollo's central thesis is deceptively simple: steady deployment beats market timing. With dispersion elevated and passive investing creating systematic mispricings, the firm argues that buying at disciplined valuations and focusing on operational improvement—rather than leverage—will define the next generation of PE outperformance.