Private equity investors rethink deal strategies as economic uncertainty reshapes Australian market
Private equity investors rethink deal strategies as economic uncertainty reshapes Australian market
Australian private equity firms are shifting their investment strategies in response to economic uncertainty, heightened competition and more selective exit markets with a focus on assets that can demonstrate resilience and value creation capabilities, supported by a more hands on approach to portfolio management, according to new research from BDO Australia.
BDO's inaugural 2026 Private Equity Survey found 98 per cent of private equity investors were adjusting investment decisions in response to economic conditions, with 68 per cent increasing their focus on bolt-on acquisitions rather than acquiring new platform businesses.
Despite the uncertainty, investment appetite remains strong, with all surveyed private equity firms planning to increase or make new investments over the next two years.
Financial services and insurance emerged as the most attractive sectors for investment, nominated by 60 per cent of respondents, followed by technology, media and telecommunications (48 per cent), consumer and retail (32 per cent) and healthcare (28 per cent).
BDO National Leader of Private Equity, Greg Ellis, said the findings pointed to a market where investors remained willing to deploy capital but were becoming increasingly selective about opportunities.
"Private equity investors aren't retreating from the market, but they're becoming much more disciplined about where they invest and how they generate returns,” he said.
"There's a greater emphasis on businesses with resilient earnings, clear growth opportunities and the operational capability to deliver value, rather than relying on improving market conditions."
The research also revealed growing challenges in realising investment returns, with 68 per cent of respondents describing the current exit market as challenging and just two per cent considering conditions buoyant.
Half of private equity firms reported accelerating exits of underperforming assets, while 46 per cent were slowing acquisition activity.
Greg said the findings highlighted the increasing importance of active portfolio management and operational improvement.
"The challenge isn't simply finding attractive businesses. Investors need to demonstrate how they'll create value throughout the ownership period and ultimately deliver a compelling proposition to prospective buyers."
The survey canvassed 105 Australian private equity and portfolio company leaders, including 50 senior investment decision-makers and 55 portfolio company finance executives.
For media enquiries:
Tate Papworth
Manager, Media
E: Tate.Papworth@bdo.com.au
Ph: 0433411189