AI Took Another Step Toward Replacing White-Collar Work

Good morning, ! This week we're covering how AI is redifining the labor`s market, Gross PE returns across different managers and how supply chain stress is growing again, pushed by geopolitical tensions and energy costs shock.

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DATA DIVE

AI Is Breaking the Labor Market Playbook

For decades, stronger markets meant stronger hiring. AI is starting to break that relationship. Before ChatGPT’s release, the correlation between U.S. equities and job openings sat near 0.89. Since late 2022, it has flipped to roughly negative 0.90 as the S&P 500 climbed while hiring demand weakened.

The shift is structural. Firms are increasingly using AI to scale research, customer support, coding, and administrative workflows without adding proportional headcount. The labor market still looks stable on paper, but hiring momentum is slowing beneath the surface as companies reassess long term workforce needs.

For private equity, AI is becoming a margin expansion tool as much as a growth tool. Sponsors that deploy AI effectively may grow EBITDA without growing payrolls. Read the Full Report HERE

TREND TO WATCH

Private Equity’s AI Pivot Gets Physical

The private equity industry’s biggest players are making one thing clear: AI may be the future, but software alone no longer guarantees returns. While firms spent Q1 defending their tech portfolios and downplaying fears around AI disruption, capital allocation told a different story.

According to PitchBook data, firms like Blackstone and KKR still delivered strong trailing twelve-month PE returns of 15.7% and 10%, respectively, but Q1 performance slowed sharply across the sector. The cooling software environment is pushing managers to rethink where long-term value will be created.

Instead of doubling down on traditional SaaS bets, public PE giants are increasingly shifting toward AI infrastructure, energy, data centers, and other asset-heavy sectors that support the next generation of computing demand.

The message is becoming consistent across the industry: the next PE cycle may not be built on software applications themselves, but on the physical layer powering AI adoption. Firms are repositioning portfolios accordingly — either to capture that upside or to shield themselves from AI-driven disruption. (More)

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DILIGENCE CORNER BY 150 DILIGENCE

Dry Powder Has a Shelf Life

Private equity firms are sitting on capital that is getting older by the quarter. According to McKinsey, just 6% of global buyout dry powder in 2025 is less than one year old, down from 24% in 2018. Meanwhile, capital aged 2 to 3 years has climbed to 25%, its highest level in the dataset.

That shift matters because aging dry powder changes behavior. Younger funds can afford patience. Older funds start underwriting urgency. The closer capital gets to deployment deadlines, the harder it becomes to maintain pricing discipline, especially in competitive auctions.

For diligence teams, this creates a subtle but important market signal. Sponsors under time pressure often move faster, lean harder on commercial upside cases, and tolerate narrower margins for error. In other words, diligence quality becomes a differentiator precisely when the pressure to shortcut it rises.

Bottom line: the next phase of private equity may not be defined by lack of capital. It may be defined by how much of that capital is running out of time. (More)

LIQUIDITY CORNER

The Exit Window Is Cracking Open

Private equity firms are finally sounding less defensive about exits. Bain data shows 55% of GPs expect more portfolio exits in 2026 versus 2025, including 17% expecting significantly more activity. Only 14% see exits declining.

That matters because private equity has spent the last two years trapped in a holding pattern. Distributions slowed, holding periods stretched, and continuation vehicles became the industry’s preferred coping mechanism. Now the mood is shifting from survival to release.

But optimism alone does not create liquidity. Buyers still want cleaner balance sheets, resilient margins, and believable growth stories. The firms that spent the slowdown improving operations instead of waiting for multiple expansion are likely to control the next exit cycle.

The real takeaway is less about volume and more about pressure. LPs need DPI. GPs need realizations. And after years of delayed exits, even a partially reopened market can quickly turn into a rush for the door. (More)

MACROVIEW

Supply Chains Stay Under Pressure in 2026

Global supply chain stress is rising again as higher energy costs and geopolitical tensions disrupt shipping and freight networks. While current conditions remain below the extreme levels reached during the pandemic, logistics costs and delivery times are moving higher across key trade corridors.

The rerouting of vessels away from the Red Sea, combined with rising air freight expenses, is increasing pressure on manufacturers and procurement teams worldwide. Recent indicators from the World Bank and the New York Federal Reserve show supply chain conditions at their highest levels in several years.

For businesses, the challenge is less about structural overhaul and more about disciplined execution. Supplier reliability, inventory management, and transport flexibility are becoming increasingly important as global trade enters a period of persistent operational friction. (More)

"Opportunities don’t happen. You create them."

Chris Grosser