Private Markets Square #7 — The Market Is Not Collapsing. It Is Transforming.
- 5 days ago
- 5 min read
Updated: 3 days ago
Published May 21, 2026 · Private Markets Square Newsletter · 6 min read
Editorial: Private Equity Enters a New Phase of Discipline
French private equity is the subject of contrasting readings. Slower exits, more cautious investors, more selective fundraising: some see these as signs of a weakening market. Our reading is different.
The market is not collapsing. It is transforming.
According to PitchBook data on French private equity in Q1 2026, €10.9 billion was invested across 220 transactions, a volume in line with the historical average post-2022. At the same time, the median LBO size has risen sharply to €100 million, compared with €40 million in 2024, while available dry powder in France is estimated at €35 billion [1].
These numbers tell less of a crisis story than a regime change. Funds are still investing, but with more discipline. They favour quality assets, existing platforms, build-ups, and situations where value creation can be controlled.
Private equity is therefore returning to its fundamentals: revenue growth, EBITDA improvement, operational transformation, digitalisation, internationalisation, build-up and quality of execution.
In this new phase, access to private markets is no longer enough. Selection becomes central. This is precisely the conviction we hold at AirFund: the sustainable democratisation of private markets rests on three inseparable pillars — access, education and selection.
Market Pulse — French Private Equity: Three Takeaways from Q1 2026
The latest French private equity figures give a useful reading of the market. Far from a collapse, they show a market that is more disciplined, more concentrated and more demanding.
1. It is not a crisis, it is selectivity
With €10.9 billion invested across 220 transactions in Q1 2026, the French private equity market remains active but activity is increasingly concentrated on larger, better-identified opportunities.
The rise in median LBO size, from €40 million in 2024 to €100 million in Q1 2026, illustrates this evolution. There are fewer deals, but more significant ones. Funds are favouring opportunities where they have strong conviction, a clear strategic angle, or an already-established platform.
This dynamic reflects increased discipline. GPs no longer deploy simply because capital is available. They look for assets capable of supporting a genuine value creation plan.
2. New vintages may benefit from a better entry point
Rising interest rates have profoundly altered the market's balance. For several years, valuations were supported by an extremely favourable financing environment. This context has changed.
Sellers are gradually adjusting their expectations, multiples are normalising in some segments, and buyers are showing greater pricing discipline. For funds deploying capital today, this period may therefore represent an attractive window.
This does not mean all funds or vintages are equal. On the contrary. In a more demanding market, the advantage goes to managers who stay disciplined, identify the right assets, and create value through means other than leverage or multiple expansion.
3. GP quality has never mattered more
The market is becoming more polarised. Capital is flowing more naturally toward established GPs — those with a solid track record, experienced teams, differentiated sourcing, and operational resources capable of supporting portfolio companies.
Performance no longer depends solely on the ability to access a transaction. It depends on the ability to transform a company: organic growth, build-ups, margin improvement, management structuring, digitalisation, internationalisation, pricing.
For distributors, this evolution has a direct consequence: offering exposure to private equity is no longer enough. You need to understand strategies, compare managers, analyse performance drivers, and clearly explain to clients why a fund deserves a place in their portfolio.
Our Conviction: End of Purely Financial PE, Return to Operational PE
Private equity has navigated several cycles: the dot-com bubble, the 2008 financial crisis, COVID, and the sharp rate hike. Each cycle has challenged its model. Each cycle, the best managers have adapted.
What is changing today is not the appeal of the asset class. It is the levers that drive performance. For over a decade, part of performance was supported by two powerful engines: low rates favouring leverage and the expansion of valuation multiples. Both engines are now less obvious.
Performance must therefore come more from operational value creation: supporting companies in commercial development, external growth, digital transformation, international expansion, margin improvement, or management structuring.
This is where GP quality becomes decisive. A good manager does not just select a company. They must be able to build a credible value creation plan, execute it, and adjust it over time.
In a market that is becoming disciplined, selection becomes the first act of value creation.
Expert View: How to Analyse a Private Markets Fund
In public markets, investors can quickly adjust exposure. In private markets, commitment is generally long-term. A selection error is therefore not easily corrected.
A six-dimension grid structures fund analysis: the management team, strategy, track record, risks, fees, and fund timeline.
1. Management team — You invest in a team before a strategy. Experience, stability, joint history, and having navigated several cycles are decisive.
2. Strategy — Clear, readable, and consistent over time. A repeatable method rather than a vague promise.
3. Track record — Beyond IRR: net performance, multiples, holding period, consistency, and dispersion across investments.
4. Risks — Sector, geographic, leverage, or liquidity. The absence of clear discussion is often a warning signal.
5. Fees and alignment of interest — Direct impact on net performance, structure of carried interest, personal investment by the team.
6. Fund timeline — Capital calls, distributions, real holding period: essential to manage portfolio allocation.
At AirFund, every referenced fund goes through a structured selection process, written due diligence, exchanges with management teams, and a presentation at the investment committee. The objective: to go beyond the numbers and truly understand how a manager works, makes decisions, and creates value over time.
Inside AirFund: Understanding Funds Better, More Simply
In a more selective market, wealth management professionals need quick access to the right information: understanding a strategy, identifying a fund's key points, comparing essential characteristics, spotting risks, and preparing client discussions.
This is precisely one of the roles of the AirFund platform: to make analysis of private market funds more readable, more structured, and more accessible. Fund 2-pagers provide in a few pages the key information: investment strategy, rationale, target allocation, main characteristics, recurring fees, and main risks.
This approach is complemented by Ask AirFund, our information assistant integrated into the platform: navigating documentation more easily, retrieving information, clarifying a point, or preparing a question ahead of a client conversation.
In a market where selection is becoming central, the AirFund platform is designed to support wealth advisors at every stage: understand, analyse, compare and explain.
Events & Community: Meet AirFund at Occur Paris, June 25-26
AirFund will be at the Occur Paris event on June 25-26, 2026. Two days of discussions with wealth management professionals on the major trends in private markets, fund selection challenges, and solutions for integrating private markets in a more structured way into client allocations.
We look forward to seeing you there to continue the conversation on the democratisation of private assets, financial education, and the key role of advisors in this new phase of the market.
Sources & Glossary
[1] PitchBook — Q1 2026 France Market Snapshot, published 28 April 2026. Article: France PE hits lowest activity since 2021 as caution rises.
Glossary: LBO (Leveraged Buy-Out) — acquisition of a company financed with debt · Build-up — external growth strategy through successive acquisitions · Dry powder — committed capital not yet invested · GP (General Partner) — fund management company · LP (Limited Partner) — fund investor · VCP (Value Creation Plan) — fund's value creation plan for a portfolio company.