Sector Focus: AI-Driven Tech, Healthcare and Financial Services Lead Dealmaking

December 02, 2025

Key Takeaways

75% expect to invest in life sciences (including healthcare) over the next 24 month. Almost as many (74%) state that they will invest in technology.

LPs increasingly prefer sector-specialist GPs, and specialist funds have outperformed on distributions (55% overall LP preference; EMEA 57%, North America 58%, APAC 45%; Preqin shows higher DPI for specialist vintages vs. generalists).

Financial services remains a fertile buy-and-build arena, targeting investment brokerages, payment processing, private credit and real estate finance.

In a market where competition for fundraising is fierce, it has become essential for GPs to differentiate their propositions to LPs. Sector specialization has been a pathway to delivering this differentiation.

Over half (55%) of respondents in the 2026 Global Private Equity Outlook note that their investors have a preference for specialized strategies. In EMEA and North America, 57% and 58% of respondents, respectively, find that their investors prefer their investment strategy to be specialized, with 45% of APAC respondents recognizing a preference for such strategies.

Preqin research, meanwhile, shows that sector specialist funds have made more distributions to LPs over time. Sector specialist funds in the 2012-2015 vintages posted median DPI of 136.7%, versus median DPI of 130% for generalist vehicles. For 2016-2019 vintages, sector specialist DPI was more than 7% above generalist fund DPI. In a liquidity-constrained market, the cash-on-cash outperformance of sector specialist vehicles has been a key point of difference.

Managers can refine sector expertise in different ways.

Mid-market firms will focus on a handful of verticals. Their chosen verticals will be where they have the track record and the deal professionals with experience and networks. Large-cap managers will typically have different sector pods across their platforms and will raise multiple funds dedicated to specific sectors. We see large-cap managers consistently broadening their offerings across sectors, and the market is at a point where the LP would probably expect to have that choice.” Nick Tomlinson, London-based Dechert partner

Sector specialization is not only important for fundraising, but also for differentiating a dealmaker’s proposition to prospective target companies and management teams.

The sector specialism track is evident. As a GP, you don’t want to spread yourself too thinly and appear too generalist. A focus on two or three priority sectors provides a dealmaker with a repeatable edge and an ability to build an engine for steady deal flow. A manager with proprietary sector insights, an understanding of the sector-specific regulatory climate and an operator network will have an edge in deal processes.” Maria Tan Pedersen, co-head of Dechert’s Emerging Markets practice

Hot sectors: where GPs are focused

The survey findings show that respondents are homing in on priority sectors and are well-versed in the specific dynamics and challenges that come with investing in their chosen industries.

Life sciences (including healthcare) and technology are each expected to be invested in by approximately three quarters of survey participants over the next 24 months, with each of these two sectors also selected by 22% of GPs (the highest scoring categories for GPs) as their most important sectors. This should come as no surprise given the underlying demand and growth in these industries.

Tech control

Technology has been a go-to industry for the buyout sector for years now, with GPs drawn to investments in business-critical software with sticky customer bases and recurring, subscription-based revenue streams. The roll-out of AI-powered applications across all industries provides additional long-term tailwinds for technology buyouts, with McKinsey forecasting that data center capacity, to keep pace with accelerating AI demand, will have to grow at a compound annual growth rate of 27% between 2023 and 2030.

Of the respondents that plan to invest in technology, software and big data analytics are the most popular subsectors, targeted by 92% and 82% of respondents, respectively. Cybersecurity and AI are each being targeted by seven in ten respondents planning to invest in technology.

While global trade is expected to have a significant impact on those investing in technology, artificial intelligence (88%) and/or cybersecurity, privacy, data risks and regulations (86%) are the key macro trends which will have the greatest impact on investment theses/strategies.

Healthy returns

The life sciences and healthcare sector, meanwhile, has delivered consistent deal flow over time. Big pharma companies have regularly turned to M&A to fill their drug pipelines and push back patent cliffs, presenting buyout investors with a reliable channel for exits. PE will continue investing in healthcare and healthcare-adjacent businesses due to demand growth driven by aging populations and chronic diseases; resilient payer-backed cash flows; and fragmented markets that present attractive opportunities to create efficiencies and better patient experience. In tech-enabled lower-cost care settings and biopharma services, there are opportunities for investors to scale platforms, drive operational efficiencies, and capture value despite heightened regulatory and reimbursement scrutiny.

PE firms have also jumped at newer opportunities to invest in certain life sciences services companies. Contract development and manufacturing organizations (CDMOs), which provide drug development and manufacturing services to pharmaceutical companies on a contract basis, provide one example of a market segment that has attracted significant buyout investment.

The diversity of drivers in the sector is demonstrated in two of the deals in which Dechert had an advisory role. In August, PE health specialist ARCHIMED announced a carve-out of ARK Diagnostics, which valued the target at US$428 million; and three months later, Morgan Stanley Capital Partners (MSCP) sold Clarity Software Solutions, a provider of health plan member communucation services, to health experience and insights company mPulse.

Healthcare and life sciences also continue to present a broad range of assets into which PE can lean. Of those expecting to invest in the sector, three quarters are planning to invest in its industry-specific technologies and care service lines, while 71% are planning to invest in biomed/genetics. Home health, home care and hospice also remain in the sights of a majority of respondents (57%), even with U.S. federal reimbursement uncertainties at present.

From a long list of macro-trends, 57% of respondents planning to invest in the life sciences and healthcare sector point to issues surrounding global trade as having a top-three significant impact on their industry-specific investment thesis and business strategies. This is in addition to macro-trends associated with unmet patient needs and value-based care and alternative reimbursement models, each selected by 48% of respondents. Concierge medicine (e.g., wellness, innovation, private/cash-pay patient care), a first-time survey choice, was selected by 41% of respondents as a top-three macro trend for this sector. As the population ages, this sector could prove very attractive for PE managers in the coming years.

Financial services interest

The financial services sector is another area that remains on the respondents’ radars. Financial services has been a steady performer for PE firms, with buyout deal value in the sector increasing in each of the last two years.

Most financial services M&A is still focused on acquiring niche managers or funds outside the manager's typical strategy, which they can use to build out new areas without the expense of hiring new teams.

Wealth management, specialty finance, fund administration and insurance brokerage businesses have presented attractive buy-and-build opportunities for managers; investment in fintech and digital payments has also proved successful.

These financial services deal trends look set to continue animating the market in 2026 and beyond. Of those planning to invest in the financial services sector, the top subsectors being targeted are investment brokerages (74%), payment processing (69%), private credit investment management (57%) and rental/leasing/real estate finance (50%).

In terms of macro-trends affecting the market, 88% believe credit market changes will be one of the most impactful. The only other macro-trend highlighted by a majority of respondents is AI and technology-driven growth, selected by just over half (55%).

Interest in services businesses also continues to grow, with PE firms turning their focus to accounting, fund administration, specialty finance and other similar financial services businesses in recent years. Accountancy services have been a particularly active area, as seen with New Mountain Capital investing in Grant Thornton and Moss Adams' strategic merger with Baker Tilly, which created the sixth-largest advisory CPA firm in the U.S.

Dechert served as advisor on both of these deals, putting the firm very much at the forefront of this emerging trend.

Footnotes

The preceding article is an excerpt from the 2026 Global Private Equity Outlook report, an annual publication that uses qualitative and quantitative findings to look at current PE industry trends and views on where the market is heading in 2026.