Welcome to the Thanksgiving week recap edition of The Private Capital Compass, brought to you by Private Capital Global (PCG), a Sparc Group company. 

In this edition, we examine the outlook for private equity as we enter 2026, with EY’s analysis highlighting how technology, private credit, and investor diversification are reshaping the industry’s growth trajectory. 

We also spotlight how the generational wealth transfer is impacting family offices and the state of VC investing in crypto.

This week’s deep dive focuses on Private Capital’s 2026 playbook, exploring how firms are leveraging AI, data, and flexible capital structures to drive value creation, manage risk, and capitalize on market transitions across tech, industrials, and insurance sectors.

Compass Points

Key insights at a glance:

• Private Equity Enters 2026 on Offense: EY’s 2026 private equity outlook points to an industry leaning into private credit, AI-enabled operating models, and diversified LP bases to drive the next phase of growth. With private credit now a $1.3 trillion pillar of the ecosystem and expanding beyond leveraged lending into investment-grade markets, PE firms are increasingly blurring lines with traditional banks while using credit platforms to stabilize returns. At the same time, firms are embedding data, automation, and AI across sourcing, underwriting, and portfolio value creation, thereby widening the gap between scaled managers with proprietary tech infrastructure and mid-market specialists competing on sector depth. LP profiles are broadening as semiliquid funds, sovereign wealth capital, and newly opened retirement channels increase access and reshape fund design, governance, and disclosure expectations. Meanwhile, exits are finally thawing, but continuation funds, sponsor-to-sponsor trades, and dual-track pathways remain essential tools for navigating valuation friction. Heading into 2026, sector focus is coalescing around tech, industrials, and insurance, each tied to AI infrastructure, energy resilience, and duration-matched credit strategies. 

• Family Offices Confront Rising Internal Tensions as $83.5 Trillion Wealth Transfer Reshapes Expectations: According to a recent analysis in CEO World Magazine, family offices are facing rising internal conflict driven by generational turnover, shifting values, and uneven governance maturity. With an estimated $83.5 trillion set to transfer from baby boomers to Gen X, millennials, and Gen Z over the next two decades, advisers are increasingly pulled into roles that resemble mediators and translators rather than traditional wealth managers. Divergent expectations around ESG, digital transparency, and the role of wealth itself, combined with the growing financial influence of women heirs and geographically dispersed family members, are creating complex dynamics. Succession risk, alignment risk, and governance fatigue within UHNW families are factors that can influence capital flows, decision-making stability, and long-term partnership outcomes.

• Crypto VC Rebounds: $4.6B Floods Into Q3 Deals as Capital Concentrates in Later-Stage Infrastructure Plays: Venture capital investment in the crypto and blockchain sector surged to $4.65 billion across 415 deals in Q3 2025, marking the second-strongest quarter since the FTX collapse and a 290% jump in capital deployed from Q2, according to Finance Feeds. While still below the peak-era highs of 2021–2022, the rebound reflects a shift toward mature, revenue-generating platforms in trading, infrastructure, custody, and tokenization as institutional demand and regulatory clarity build. Nearly half of all capital came from a handful of large rounds, including Revolut’s $1 billion raise and Kraken’s $500 million infrastructure investment. The U.S. continues to dominate activity accounting fo 47% of capital and 40% of all deals, bolstered by a more supportive legislative outlook. Although Web3, NFTs, and gaming have cooled from prior hype cycles, early-stage experimentation persists, and stablecoin, payments, and AI-crypto integrations are gaining momentum. 

• Experiences, Luxury, and AI Open New Channels for PE Deployment: McKinsey’s latest analysis shows the global travel sector entering one of its most dynamic investment phases in a decade, with steady 3% CAGR growth from 2017–2024 now accelerating as younger travelers, rising global wealth, and rapid technology adoption reshape demand. Experience-led categories such as adventure travel, wellness, social and group travel, and nontraditional destinations continue to take share, while luxury travel is growing at roughly 6% annually, outpacing the broader sector as high-net-worth populations expand in North America, Asia, and the Middle East. At the same time, AI and data-driven personalization are transforming traveler expectations, fueling demand for platforms that enable bespoke itineraries, attribute-based hotel pricing, loyalty ecosystems, and automated guest-service operations. These shifts are opening new lanes for private equity across expedition cruises, yacht charters, marina infrastructure, live-event hospitality, members-only clubs, wellness-integrated lifestyle concepts, and next-generation travel tech. 

• Healthcare Deal Flow Stays Hot as PE Accelerates Outpatient Roll-Ups: Private equity deal activity in health care remained resilient in October, with 22 buyouts, 43 add-ons, and 15 growth investments, driven by sustained consolidation across outpatient medical and dental practices, according to PESP. Despite new state-level scrutiny, platform roll-ups in dermatology, gastroenterology, home health, physical therapy, oncology, urology, and dental services continued at pace, alongside a notable PE-to-PE trade with Kingswood acquiring Drive DeVilbiss from CD&R. The persistence of deal flow amid rising regulation underscores a defining dynamic for 2025: while lawmakers tighten oversight of clinical ownership and corporate practice structures, sponsors remain active due to strong cash flow profiles, attractive fragmentation, and operational scale opportunities. As regulatory friction grows, platforms with disciplined governance, robust compliance, and scalable infrastructure will be best positioned to navigate increasing transparency requirements while continuing to drive value creation.

Deal Spotlight: LGP Takes Majority Stake in Topgolf to Accelerate Standalone Growth

Transaction: Callaway has reached an agreement to sell a 60% stake in its Topgolf and Toptracer businesses to Leonard Green & Partners (LGP), in a transaction that assigns the Topgolf platform an enterprise value of roughly $1.1 billion. The move follows several months of strategic review prompted by cooling same-venue sales and leadership changes, including the August departure of former Topgolf CEO Artie Starrs. Topgolf enters the transaction with improving performance indicators. In Q3 2025, the company returned to modest same-venue sales growth, fueled by a resurgence in its core guest segment that typically books one or two bays and drives the majority of revenue. Operational enhancements, expanded digital ordering ,and the rollout of Toast’s POS system have helped lift throughput and guest spending. The deal is expected to close in the first quarter of 2026.

Why It Matters: This deal represents one of the most notable private equity moves in the experiential leisure sector in recent years. For LGP, it’s an opportunity to take a proven global concept and guide it through its next phase of operational sophistication and international expansion. The transaction comes at a moment when investors are testing the durability of “eatertainment” models, many of which have experienced volatility as discretionary spending has rotated. Topgolf, however, has demonstrated a unique ability to pull in a broad customer base, from casual players to corporate groups, and continues to benefit from the broader rise in off-course golf participation. 

LGP’s involvement also highlights a broader trend: private equity firms increasingly favor consumer platforms that blend hospitality, technology, and recurring engagement. Toptracer’s role within the ecosystem, powering data-driven golf experiences both inside and outside Topgolf venues, offers multiple monetization channels and a defensible competitive moat. That combination positions the business not just as a leisure venue, but as a scalable sports-tech platform. For Topgolf, new ownership provides capital, operational expertise, and a dedicated growth mandate: resources that could accelerate venue expansion, elevate unit economics, and support continued digital upgrades.  

Deep Dive: Tech, Credit, and a New Era of Diversification

As the industry heads into 2026, private markets are undergoing one of their most consequential periods of transformation in two decades. The institutionalization of private credit, the rapid evolution of AI-enabled operating models, and a widening and more sophisticated global investor base are reshaping how capital is raised, deployed, and managed. These trends are reinforcing one another, accelerating a broader maturation of the private capital ecosystem defined by structural flexibility, stronger specialization, and a technology-first approach to value creation.

Private Credit Becomes the System’s Third Pillar

No trend captures this momentum more clearly than the rise of private credit. What began as a post-GFC response to bank retrenchment has become a foundational component of the global capital stack. With the U.S. private credit market approaching $1.3 trillion and dry powder north of $400 billion, credit has evolved from an opportunistic strategy into a permanent pillar alongside private equity and real estate.

Private lenders are moving directly into the $40 trillion investment-grade universe—often in collaboration with banks looking to syndicate risk, strengthen client relationships, or preserve balance-sheet capacity. This dynamic is ushering in a new era of public–private partnership, blurring lines between traditional lending and private capital solutions.

For private equity sponsors, this shift offers multiple advantages: improved refinancing pathways, greater flexibility in capital structures, and access to non-correlated returns within multi-strategy platforms. Although recent instances of borrower distress have highlighted the need for disciplined underwriting and tighter risk controls, the long-term trajectory remains clear. Speed, certainty, and bespoke structuring continue to draw borrowers toward private lenders, reinforcing credit as a stabilizing engine of growth in an otherwise uneven macro environment.

Tech and AI Redefine the PE Operating Model

By 2026, leading firms are embedding AI across the investment lifecycle. Deal teams are leveraging AI-driven sourcing tools to generate proprietary pipelines; diligence processes are being augmented with real-time data ingestion and model-driven underwriting; and portfolio management is becoming more predictive, linking operational levers to performance outcomes with unprecedented granularity. Firms that once relied on spreadsheet-based monitoring now operate with dynamic dashboards, scenario engines, and automated KPI tracking.

The largest global managers are investing heavily in building in-house data science teams, integrating cloud-native platforms, and aggregating proprietary data assets that strengthen their competitive edge. Specialist firms are deploying tech to deepen their sector expertise, sharpen decision-making, and build repeatable value-creation frameworks that rival the scale players. Technology and AI are redefining the very architecture of private equity value creation. The last decade was marked by the rise of operating partners and functional expertise; the next decade will be defined by data infrastructure, automation, and applied machine intelligence.

Investor Diversification Expands Market Access and Expectations

New channels, new structures, and new expectations are fundamentally changing how capital flows into private markets. The growing adoption of semiliquid products and the opening of retirement frameworks, particularly the expanding pathways for 401(k) access, are bringing private markets to a broader swath of individual investors. Nearly 90% of GPs are exploring DC-friendly vehicles, with many beginning in private credit due to its yield orientation and smoother valuation profile. These products will impose new requirements around liquidity management, transparency, and operational rigor.

Exits and Sector Dynamics Shape the Road Ahead

Although exits remain uneven across regions and strategies, the trajectory is improving. PE-backed IPO activity has reached its highest point since 2021, while narrowing bid-ask spreads suggest stabilizing valuation expectations. Sponsors continue to rely on continuation funds, dual-track processes, and sponsor-to-sponsor sales to manage aging portfolios, but the backdrop for 2026 looks far more constructive. Sector focus is similarly crystallizing. Technology remains resilient, driven by accelerating AI adoption and an improved rate environment. Industrials and energy are benefiting from demand for digital and power infrastructure. And insurance continues to play an increasingly strategic role, fueling the growth of credit-oriented platforms with long-duration capital.

As we approach 2026 with renewed momentum, the year ahead demands a sharpened approach from operating partners, deal teams, and investors alike. Market conditions are improving, but the bar for differentiation has never been higher. This is the moment to reset priorities, realign resources, and accelerate execution.

For operating partners: make 2026 the year you upgrade your operating playbook. Embed data, automation, and AI into everyday decision-making. Portfolio companies will face pressure to scale efficiently, expand margins, and increase pricing power. Treat digital enablement as a core value-creation lever, not a back-office upgrade.

For deal teams, discipline and precision should guide every stage of the investment cycle. Build differentiated theses, expand sourcing channels, and leverage predictive analytics to anticipate performance and risk with more clarity than your competitors. Integrate the operating teams into the diligence process and let them get started early for the best results. 

For investors and LPs, now is the time to reassess portfolio construction. Diversification across private credit, structured equity, and sector-specialized funds will be critical as the market broadens. Demand transparency, push for modern reporting, and prioritize managers with real technology capabilities.

Thank you for joining us for this week’s edition of The Private Capital Compass. We hope you had a wonderful Thanksgiving holiday and were able to enjoy time with family and friends, as well as a well-deserved break.

As we look ahead to 2026, we’re excited to continue the conversation across our events in Austin, Boston, Chicago, London, New York, and San Francisco. Be sure to subscribe to The Private Capital Insiders podcast, hosted by Frank Scarpelli, for direct insights from leading dealmakers and industry experts navigating today’s dynamic private capital landscape. Our goal remains the same: to keep you informed, inspired, and ready to translate market insight into actionable strategies across your investments and portfolios.

Opening & Closing Remarks from Erik Boender, Vice President & COO, Private Capital Global (a Sparc Group company)