Year-End 2025 Credit Market Outlook Survey
What Portfolio Companies and Private Equity Sponsors are Signaling Next
Survey Backdrop
Heading into 2026, we are seeing confidence rebound across both portfolio companies and sponsors, with expectations for revenue growth, EBITDA expansion, and new platform acquisitions reaching their strongest levels since our biannual survey’s inception in 2024. While valuation gaps and quality of deal flow continue to temper M&A executions, the underlying appetite for growth and deployment is firmly reestablished. The perspective that follows draws on Antares’ deep market coverage across our diverse U.S. middle market portfolio and long-standing sponsor relationships.
Methodology
The Year-End ’25 survey was based on responses from 48 of Antares’ Private Credit portfolio companies and 49 private equity (“PE”) sponsors, conducted in November 2025. The prior Mid-Year surveys were conducted in June of those respective years and Year-End ’24 in November 2024.
Key Takeaways
Portfolio Companies
- Expectations for revenue and EBITDA growth are at the strongest levels since the survey’s inception (June 2024).
- Geopolitical risk, tariff / supply chain disruptions and interest rates have declined significantly as cited top challenges compared to Mid-Year ‘25, while sales volume demand and labor availability remain top concerns.
- M&A remains the top capital priority, with falling interest rates improving companies’ willingness to invest. Investment in capital equipment rose to #2, cited by 23% of respondents, compared to only 9% at Mid-Year ‘25.
Sponsors
- An increased majority of PE sponsors are optimistic about buying a new platform in 2026; however, sponsors’ appetite in selling a portfolio company next year remains lower than buying – signaling a possible ongoing disconnect in transaction activity.
- In gauging current pressure from LPs to return capital, 40% of sponsors classified LP pressure as “high,” with 40% reporting “medium.”
- While concerns have come down since surveyed post-Liberation Day at Mid-Year ‘25, tariffs / supply chain disruption are tied with consumer confidence with 53% of sponsors citing each as the #1 risks to their portfolio and investment strategy in 2026.
- Continuation vehicles remain the preferred option for sponsors when it comes to liquidity solutions, while preferred equity, NAV loans, and GP stake sales have declined in popularity.
Portfolio Companies Signal Optimism with Heightened Performance Outlooks
Heading into 2026, portfolio company respondents areindicating the strongest expectations of top-line and bottomline growth since we first began our survey in June 2024 with 40% of respondents expecting 10%+ year-over-year revenue growth and 50% expecting EBITDA growth of 10%+.Growth drivers include increased demand for their respective industries and a lower interest rate environment freeing up capital to spend on top priorities such as M&A and capital equipment. Consistent with what was reported at Mid-Year ’25, over half of portfolio company respondents plan to implement price increases and expect EBITDA margins to expand.
While most respondents still anticipate flat-to-low GDP growth (0-2%) in 2026, there was a noticeable shift to 38% of those who anticipate modest U.S. economic expansion (2-3%), upfrom a 19% dip in the Mid-Year ’25 survey; however, still down from 49% a year ago.
Top challenges identified by portfolio companies remain sales volume demand and labor availability; however, implementing price increases – despite being a strategy for the majority in 2026 – has become a heightened challenge relative to previous surveys, as it was cited by 1/3 of respondents compared to 17% at Mid-Year ‘25. Concerns around geopolitical risks, tariffs/ supply chain disruptions and interest rates were noted, but fell in terms of magnitude relative to the Mid-Year ’25 Survey.
Continued Dislocation? Buy-Side Confidence Returns while Sell-Side Less Bullish
Sponsor respondents share a similar, directionally positive sentiment as the portfolio companies. Interest among PE sponsors in buying a new platform has returned to pre-Liberation Day levels, with 80% of sponsors indicating a >50% likelihood of buying a company in 2026.
The appetite to sell, however, remains less bullish and consistent with prior surveys, with just over half citing a >50% chance of selling a company in the next 12 months. Sponsors continue to report primary headwinds to transacting are valuation expectations and a lack of high-quality deal flow. At the same time, ~40% of sponsors classify current pressure from LPs to deploy capital as “high.” As far as where sponsors are looking to invest, industrials remain #1, with 42% of respondents indicating interest, particularly in fire & life safety, environmental, infrastructure, engineering & TICC, A&D and HVAC. Healthcare has risen to #2, with interest rising to 25% of respondents, up from ~16-17% in prior periods, with appetite particularly for pharma services, HCIT/RCM and payor services.
Sponsors have identified their top two risks heading into 2026 as tarriff/supply chain disruption and consumer confidence followed by labor – cost, availability, recruitment and retention. AI disruption also saw a noticeable increase in interest called out by 1/3 of sponsor respondents, up from 13% at Mid-Year ’25.
Overall, concerns over geopolitical risk have eased considerably in the past five months for both portfolio companies and PE sponsors – dropping from 55% to 27% among portfolio company respondents and from roughly 50% to 37% among sponsor respondents.
NEW: Spotlight on AI
For the first time, we asked targeted questions on AI with insight from Antares’ Software Team. In the AI Spotlight on page 15, see where portfolio companies are using AI and how sponsors are managing their approach in their investments.
About Our Portfolio Company Respondents
U.S. Economic Expectations
Takeaway: Compared to Mid-Year ‘25, we saw an optimistic tilt to portfolio company respondents anticipating modest (2-3%) U.S. economic expansion, but the majority are still anticipating flat-to-low GDP growth (0-2%).
Company Performance Expectations
Takeaway: This is the most optimistic we’ve seen respondents on anticipating strong top-line and bottom-line growth in the past 18 months.
“Optimism around future performance across a representative sample of our large, diversified portfolio is encouraging, particularly given the uncertain geopolitical backdrop. We have seen particular strength in our services and software portfolios that have highly recurring revenue profiles and stable demand drivers.”
— Shannon Fritz, Deputy Chief Investment Officer
Takeaway: At year-end, we saw an increased bifurcation toward margin expansion and compression – with fewer respondents anticipating margins to remain flat. Following 2Q25 tariff announcements, we saw optimism around margin expansion temper, but remain positive. At year-end, we saw an uptick in anticipated margin expansion; however, it has not returned to pre-Liberation Day levels.
Takeaway: The majority of portfolio company respondents are still actively implementing price increases. However, implementing price increases is expected to be increasingly challenging in 2026 (see page 10).
Takeaway: While optimism for industry demand declined drastically since the summer, we’ve seen a rebound to levels above 2024 responses.
Portfolio Companies’ Capital Priorities
Takeaway: The majority of portfolio companies are expecting to increase headcount in 2026.
Takeaway: Following the two interest rate reductions YTD as of the survey (25bps each), fewer see interest rates as materially impacting their M&A plans.
Takeaway: While M&A remains the top capital priority for portfolio companies in 2026, we saw an uptick in planned investment in capital equipment (#2).
Top Challenges for Portfolio Companies in 2026
Sales volume demand and labor availability remain top two areas of concern for portfolio companies heading into 2026. As we get further away from Liberation Day, at Year-End ‘25 we saw a substantial decline in portfolio company respondents who identify tariffs/supply chain disruptions as a top risk from ~50% at Mid-Year ‘25 to ~30%; however, ~50% of sponsors still view it as a top risk (see page 14). Geopolitical risk has come down substantially for portfolio company respondents (from 55% Mid-Year ‘25 to 27% at Year-End ‘25) and for sponsors respondents it has come down to 37% from ~40% at Mid- Year ‘25 and 50% a year ago.
“We continue to monitor our portfolio companies’ adaptive resiliency and pricing power in the face of
possible stagflationary headwinds. The path of interest rates and seemingly ever-present geopolitical
risk also remain top of mind.”
– Tyler Lindblad, Chief Investment Officer
Sponsor Deal Activity – 2026 Expectations & Drivers
Takeaway: 80% of sponsors state there is a >50% likelihood that they’ll buy a new platform in 2025 which is up from Mid-Year ‘25 but in-line with Year-End ‘25 and Mid-Year ‘24.
Takeaway: 80% of sponsors have conviction that their investment dollar volume will rise 5%+ versus in the prior year. Of those, ~20% are anticipating a sharp rise (15%+), which is less bullish than sponsors were heading into 2025.
Takeaway: Valuation expectations were cited as the #1 constraint to deploying capital, surpassing lack of high quality deal flow which was #1 at Mid-Year ‘25, but remains a close #2.
Takeaway: Consistent with prior periods, 55% of sponsors indicated a >50% likelihood they’ll sell a company in 2026.
When asked, ~40% of sponsors indicated that currently, pressure to deploy capital to LPs is “high,” with ~43% saying “medium,” and ~16% “low.”
Takeaway: Preferred equity, NAV loans and GP stake sales have come down in popularity, with continuation vehicles still being the preferred liquidity solution.
Top Subsectors of Interest for Private Equity
On the up-tick in healthcare interest: “We expect AI technology will improve drug discovery with predictions that
it will ‘nearly double’ the number of drugs that make it through the clinical trial process. This dynamic is expected to
support a rebound in growth prospects for middle-market assets within the pharmaceutical value chain. Healthcare IT
remains attractive for platforms that reduce cost, automate work, and integrate into workflows as payors and providers
continue to look for ways to increase efficiency.”
– Rich Davidson, Managing Director, Head of Healthcare Underwriting
Private Equity Sponsors’ Top Risks to Portfolio and Investment Strategy in 2026
Takeaway: Consumer confidence was tied with tariffs as the #1 risk to sponsors (53%) but cited by only 31% of portfolio company respondents (see page 10). AI disruption also saw a noticeable increase in interest called out by 1/3 of sponsor respondents, up from 13% at Mid-Year ’25, whereas only 10% of portfolio companies view it as a top challenge.
Biggest movers: AI disruption is up the most and monetary policy/interest rates down most as top-of-mind challenges since Mid-Year ‘25 reading.
Spotlight on AI
Portfolio Companies on AI
The majority of portfolio companies dedicate 10% to 20% of their IT budget to AI initiatives.
When asked, “operational efficiency,” was cited #1 area of focus for AI implementation followed by “product or services development,” “customer services,” and “sales and marketing.”
Sponsors on AI
A higher percentage of sponsors (33%) than portfolio companies (10%) indicated AI was a top risk/challenge in 2026 (see pages 10 &14). Sponsors are most frequently taking the lead in driving AI-led initiatives at their portfolio companies.
Antares and AI
“We have an experienced private credit software team at Antares that specializes in selecting, analyzing, and managing our software portfolio. We keep our finger on the pulse of AI’s capabilities today and where it could evolve in the future. Some enterprise software use cases are being materially impacted today (e.g. customer support, software development, etc.), but we expect other use cases that are complex, well integrated, delivering a solid ROI, and importantly are AI-enabled, will lead the AI race.
Similar to our portfolio companies’ survey responses, Antares is addressing both the opportunities and risks of AI.
We spent most of 2025 developing AI risk evaluation frameworks that help us make consistent, risk-adjusted decisions when selecting opportunities and managing our portfolio.”
— Dan Landis, Managing Director, Co-Head of Software Underwriting