Overview
Ahead of SuperReturn Berlin 2026, private equity faces an execution environment where structure, financing, and judgment are the real differentiators.
Execution has become the defining capability
As we are approaching the third quarter of this year, one theme stands out. Across private equity, transactions are progressing, but they are taking different paths to the finish line. Timelines are longer, due diligence is more extensive, structures are more complex, and risks are harder to price. In many cases, deals only close because the parties involved are willing to rethink the conventional approach.
The question is no longer whether capital is available or whether assets are attractive. The real question is whether deals can be executed – and how they can be successfully brought to completion in today’s challenging market environment.
The investors that succeed are not necessarily those with the most capital or the strongest pipeline. They are the ones that can navigate complexity without losing momentum.
There is no longer a “standard” deal
Expectations of a traditional buyout model with clean pricing and straightforward leverage are increasingly out of step with market reality.
Today’s transactions are bespoke by necessity. Valuation gaps persist, sellers want certainty, and buyers want protection. Bridging that tension requires flexibility.
As a result, the market is seeing a clear shift towards:
- Earnouts and deferred consideration to align expectations on future performance;
- Minority positions and staged acquisitions where conviction exists but certainty does not;
- Joint ventures and co-investment structures to share risk and unlock opportunities;
- Rollover equity and seller financing to keep stakeholders invested in the outcome; and
- More complex capital structures covering the full spectrum from senior loans to PIK structures and structured equity.
These tools are not new. What has changed is how frequently they are used, how they interplay and how central they have become to getting deals signed.
For investors, this means structure is no longer a secondary consideration. It is often the mechanism that determines whether a deal happens at all.
Financing is shaping the deal as much as the asset
Financing used to follow the deal. Now it often defines it.
While traditional lenders remain active, they have become more selective, and the terms are getting tighter. In response, private equity has leaned more heavily into alternative capital, including private credit, hybrid instruments, and structured equity.
That shift brings flexibility, but also complexity.
Different capital providers come with different expectations on control, return, and downside protection. Intercreditor arrangements are more nuanced. Covenant packages are more tailored. And in many cases, financing terms directly influence how the transaction is structured.
For dealmakers, this means financing strategy must be embedded early. Leaving it too late introduces execution risk that is increasingly difficult to unwind.
Diligence is broader, deeper, and harder to compress
One of the most significant shifts is in diligence.
Financial and legal fundamentals remain critical, but ticking the boxes is no longer sufficient, as stakeholders increasingly expect to understand a target’s exposure to a wider set of risks that can affect both value and viability.
Two areas consistently rise to the top:
- Environmental, social, and governance considerations are now seen as a core part of the deal analysis – and not a box-ticking exercise – affecting valuation, structure, and exit planning. This shift is driven by regulation, investor expectations, and reputational considerations.
- Cybersecurity and data risk have also moved to the center. Decision-makers are interested not only in whether issues exist, but also in how resilient the business is, how data flows across jurisdictions, and how regulatory regimes apply.
In addition, several other areas are becoming more critical for decision-makers:
- AI resilience is emerging as both an opportunity and a source of fragility. Stakeholders want to know whether target companies have control over their data, models, and dependencies, and whether they are exposed to third-party risk, weak governance, and unproven use cases.
- Geopolitical exposure can also directly impact value. The focus is on vulnerability to regulatory shifts, trade restrictions, and supply chain disruption, as well as the ability to reconfigure operations if conditions change.
- Market resilience is increasingly central to underwriting the investment case, as pricing power, customer concentration, and cyclicality determine how quickly performance deteriorates under stress.
These factors are no longer peripheral, as they directly affect downside protection, valuation, and the credibility of the investment thesis. This shift requires sponsors to manage a significantly broader and more interconnected diligence scope – without slowing down the deal to a point where opportunity is lost.
Cross-border deals carry more friction than before
Europe remains a highly attractive market, but cross-border execution is more complex than it was even a few years ago.
Foreign investment screening regimes, antitrust reviews, and sector-specific regulations are evolving quickly; approval processes can be unpredictable in both timing and outcome; and political considerations can also influence decision-making in ways that are difficult to model.
At the same time, differences in legal systems, tax frameworks, and business culture continue to shape negotiations and integration.
For investors, this means jurisdictional strategy is no longer a late-stage workstream. It needs to be built into the deal from the outset, with clear planning around approvals, conditions, and fallback positions.
The deals that close are the ones that adapt
Despite all of this, deals are still getting done, but they close because the parties involved are willing to adapt – sometimes significantly – from their initial positions.
In practice, that means:
- Designing structures that can flex if conditions change between signing and closing;
- Sequencing steps to manage financing and regulatory timelines more effectively;
- Using conditionality in a targeted way to balance protection with certainty; and
- Keeping stakeholders aligned as terms evolve.
What distinguishes successful execution today is not just technical precision, it is judgment: knowing where to push, where to compromise, and how to keep a transaction moving forward when the path is no longer straightforward.
Execution has become a real source of value
As conversations in Berlin will reflect, the market has not disappeared. It has simply become more demanding.
A well-structured deal can preserve value in a volatile environment. A poorly executed one can erode it quickly, regardless of the underlying asset. As a result, returns are increasingly influenced by how well deals are executed, not just what is acquired.
In a market defined by complexity, execution is no longer the final step in the process. It is the strategy.
For private equity, this is a shift worth recognizing.
The McDermott difference
Private equity transactions are not getting simpler, but with the right approach, they are still getting done.
McDermott Will & Schulte works alongside investors to navigate this complexity with a clear focus on execution. That means aligning structure, financing, and risk allocation with your commercial objectives from the outset and maintaining momentum through each stage of the deal. When challenges arise, the focus is on resolving them quickly and pragmatically, so the transaction keeps moving.
With an integrated, cross-border team, McDermott brings together the legal, regulatory, tax, and financing perspectives that modern deals demand. From first thesis to exit, our goal remains consistent: to help you manage risk, unlock opportunity, and deliver transactions that close with certainty in an increasingly complex market.
Learn more about our private equity capabilities, and feel free to reach out to us.
Our team will be attending the SuperReturn 2026 in Berlin and looks forward to discussing the latest developments shaping the private equity market. If you will be in Berlin as well, feel free to reach out to us to connect during the conference.