Carl noted that private credit has “exploded,” now financing nearly every deal—from $300 million middle-market transactions to $12 billion take-privates. Aggressive, borrower-friendly terms have made the market deep and healthy, prompting some firms to launch their own credit funds. While returns may compress as competition rises, private credit remains a dominant force in deal financing.

Preston predicts that 2026 could be a strong year for sales, driven by abundant credit and demand for high-quality assets—often pre-empted at strong valuations. Sponsors will face pressure to deliver DPI from 2020–2021 deals, while corporate carve-outs, especially in tech, are expected to rise as public companies refocus on core businesses amid shareholder activism.

Kathy and Karl emphasized that founder-led transactions require deeper engagement beyond traditional short auction processes. Spending time with management teams helps assess cultural fit and derisk deals. Cultural alignment also influences rollover decisions—recent deals have seen founders reinvest up to 49%, driven by confidence in future value creation and continuity for their teams.

Energy-focused private equity remains healthy, with upstream delivering strong cash flow and liquidity. Transition themes like electrification, LNG exports, and rising data center demand offer opportunities, though heavy capital inflows and emerging tech require selective risk-taking.

AI-driven power needs could triple in the next decade, requiring massive new generation capacity across wind, solar, nuclear, and natural gas. West Texas offers unique advantages for hyperscale data centers—ample land, recycled water for cooling, fast permitting, and major fiber connectivity—making it a prime location for infrastructure development.

Michael described renewables as one of the most exciting areas for investment, driven by political uncertainty, rising rates, and distressed counterparties. Recent deals with major international players reflect a trend of companies exiting U.S. solar and wind strategies. While public appetite has softened, structured investments like mezzanine equity present attractive opportunities in a shifting market.