Private Equity 2026: Strategic recovery and
mid-market conviction

After two years of muted performance, private markets are showing tangible signs of recovery. Driven by easing monetary policies and improved liquidity conditions, 2025 saw a significant rebound in activity. Total private equity deal value reached $595.5 billion in Q3 2025, according to Pitchbook, the highest level since late 2021 and the second-highest of the decade. In the US, exit volume rose by 22.4% compared with the previous quarter, marking the first meaningful increase since 2021. On an annualised basis, exit volumes are expected to significantly exceed those of 2024.

Carine Hermon Head of Private Assets Distribution, Bank Lombard Odier & Co Ltd.

Laurent Pellet Limited Partner, Global Head of EAM, Bank Lombard Odier & Co Ltd.

A cautious but promising restart

Despite this momentum, fundraising remains moderate. The slowdown in distributions in 2023 and 2024 led institutional investors to concentrate commitments with a limited number of managers, often already in their portfolios. In this context, co-investments are gaining popularity; they offer greater fee efficiency and direct access to high-conviction opportunities. This shift reflects a broader trend towards more selective, relationship-driven allocations.

Mid-market: fertile ground for value creation

In an environment marked by growing dispersion in performance across strategies and managers, the mid-market stands out as a strategic cornerstone. This segment, which includes companies valued at less than $1 billion, offers several distinct advantages:

• More attractive entry points: valuations are generally more reasonable than in the large-cap segment, allowing investments at lower multiples with greater potential for revaluation.
   
• Enhanced operational alpha potential: mid-market companies often present more transformation levers — digitalisation, geographic expansion, operational optimisation. The more granular nature of this segment enables targeting of specific niches and fine-tuning of strategies. Moreover, closer proximity to management teams facilitates the implementation of targeted value creation plans, co-developed with leadership.
   
• More numerous and flexible exit options: unlike large transactions, which often depend on public markets or a few strategic buyers, mid-market companies can pursue a variety of exit scenarios — industrial sales, secondary buyouts, recapitalisations, or continuation vehicles — offering greater agility across market cycles.

Access to these managers also enables participation in high-quality co-investments, supporting agile capital deployment and stronger alignment with long-term value creation.

Co-investments: catalysts for performance and alignment

Access to quality co-investments is a major strategic advantage in the mid-market. These deals allow professional investors to increase exposure to attractive transactions while optimising costs through reduced management and performance fees. They also strengthen alignment with managers, especially when selected for their sector expertise and execution discipline.

In a market where the ability to source, diligence, and execute quickly is increasingly differentiating, co-investments offer valuable flexibility. They also allow for better pacing of capital deployment, based on concrete opportunities rather than predefined fundraising calendars.

2026: towards selective and disciplined re-exposure

As 2026 approaches, professional investors should look to balance caution with strategic re-engagement. In this landscape shaped by macroeconomic uncertainty and widening performance dispersion, manager selection and access to top-tier opportunities will take precedence over broad market exposure.

The mid-market is emerging as a central driver of performance in private equity portfolios. By combining attractive valuations, value creation potential, and co-investment opportunities, it meets institutional investors’ growing demands for selectivity, alignment, and net returns. In a post-2025 world undergoing transformation, disciplined allocations and strong manager relationships will form the foundation of sustainable performance.

Biographies

Carine Hermon is Head of Private Assets Distribution at Lombard Odier & Cie SA (Private Bank). ​Carine joined Lombard Odier in 2021. ​Prior to joining the Bank, Carine worked at CA Indosuez Wealth Management, where she was Head of Asset Management Solutions as well as Head of Private Equity Investor Relation. Before that, Carine was Relationship Manager in charge of a portfolio of international companies based in Switzerland. Carine started her career in Paris at Crédit Lyonnais in mergers & acquisitions division.​ Carine holds a Master 2 in Financial Engineering from Ecole Superieure des Affaires of university Paris XII, and a Master 1 in Finance and Computing from Dauphine University (Paris).

Laurent Pellet joined the Bank in 2017 and took over responsibility for the External Asset Managers department for the Group in 2018. After starting out at Ferrier Lullin & Cie SA, he held various positions at Bank Julius Baer for more than 20 years. He holds a Diploma in Quantitative Wealth Management from HEC Geneva, a Diploma in Digital Finance Law from the University of Geneva and the CWMA.