McDermott PE Leaders on the 2026 Deal Outlook

TL;DR: On November 3, 2026, McDermott Will & Schulte said its private equity leaders spoke with Mergermarket about the deal outlook. The firm's summary says higher interest rates and continued pressure to return capital to investors are influencing deal activity. For an LP, the place that shows up is distributions: cash actually returned.

According to McDermott Will & Schulte, the resulting article explores how higher interest rates and continued pressure to return capital to investors are influencing deal activity. We have not read the Mergermarket piece itself, so this article carries no partner quotes, deal counts or valuation figures.

What does this mean for an LP?

If you own a stake in a private equity fund, the two forces the firm names meet in your distributions. Higher borrowing costs make leveraged deals harder to finance and harder to sell. Meanwhile, the people running your fund are being asked by their own investors for cash back.

Those pressures pull against each other. A sponsor that wants to hand money back needs exits. Exits depend on buyers who can finance a purchase at today's rates.

The same week, capital kept moving into private credit. CNBC reported on November 2, 2026 that Apollo Global Management launched a European private credit platform with more than 10 billion euros ($11.2 billion) of lending capacity. That is one firm's move, not a read on the whole market.

Why are exits the part to watch?

Exits are where paper value becomes cash. Our explainer on DPI, the metric that shows real cash walks through how that is measured. A fund can report a healthy-looking multiple while returning little to investors, and a slow exit market is when that gap tends to show.

Frank Steinherr, global private equity co-head at McDermott Will & Schulte, made a related point in a piece the firm sponsored at Private Equity International. In a more discriminating environment, he says, "pressure testing is becoming crucial to getting a sale over the line." Because it is sponsored content, read it as the firm's own position, not an outside assessment.

What can an LP do when exits slow down?

Your options sit in your fund documents, and they are worth knowing before you need them. Each has a catch.

Tool	What it is	Catch
Secondary sale	You sell your fund interest to another buyer	Usually priced at a discount; see the PE secondaries guide
Capital call	The sponsor draws cash you already committed	It is done to you, not by you, and it can arrive while distributions are slow; see capital call mechanics
Excuse right	Some fund documents let an LP sit out a specific investment	Usually limited to narrow legal or policy grounds; see excuse rights explained

The table lists options, not recommendations. Which one applies depends on your documents and your adviser's read of your situation.

Common mistakes

The first is treating a law firm's interview as market data. Lawyers see deals from the document side, which is useful, but it is one vantage point among several. The second is reading a headline about deal outlook as a forecast for your fund, when your fund's result depends on its own portfolio companies and its own debt terms. The third is waiting for exits to improve before you read your liquidity terms. Read them now, while nothing is urgent.

What to watch next

Watch two things in your next fund report: how much cash came back, and what the sponsor says about exit timing. If the sponsor is silent on the second, ask. Our checklist for evaluating a private equity fund lists the questions worth putting to a sponsor.

FAQ

What did McDermott Will & Schulte tell Mergermarket? The firm says its private equity leaders discussed the deal outlook. Its page says the resulting article explores how higher interest rates and continued pressure to return capital are influencing deal activity.

Why do higher interest rates matter to private equity deals? Many buyouts use borrowed money, so higher rates raise the cost of financing a purchase. That can make buyers more selective and sales harder to complete. Our LBO guide explains how the debt works.

What does pressure to return capital mean? It means fund investors want cash distributions back from sponsors. If a sponsor can't sell portfolio companies, distributions slow, and investors see it in their DPI.

Does this tell me whether to invest in a PE fund? No. It describes conditions sponsors are working in. It says nothing about any particular fund, and Angel Investors Network doesn't sell or allocate securities.

What to do today

Open your latest private fund statement and write down two numbers: capital you have put in, and cash you have received back. The difference is capital still tied up in the fund. It exists in any market, but it shows how much has yet to come back.

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Educational content only. Not investment, tax, or legal advice. Not an offer or solicitation to buy or sell securities. Past performance does not guarantee future results. Private-market investments are illiquid and involve risk of loss, including total loss of capital. Consult qualified advisers. Angel Investors Network is not a broker-dealer or investment adviser.