SuperReturn International, the private markets industry's annual conference juggernaut, rolled into Berlin this month for its largest edition yet. Over 6,000 decision-makers from 80-plus countries descended on the German capital for five days of sessions spanning AI, geopolitics, fundraising, and the state of private equity. Across all of it, one question kept surfacing regardless of topic:
How do you earn your returns when the old playbook no longer works?
Tailwinds give way to earned returns
The era of structural tailwinds, including cheap debt, multiple expansion and a rising software tide, is over. In a keynote presentation on the state of the market, Bain & Company set the scene well. According to Bain, deal activity in the first half of 2026 slowed sharply, exit values are down roughly 20% year-on-year, and distributions as a percentage of NAV are at record lows for the fifth consecutive year. Behind the headline numbers sits a vast stock of unrealised assets underwritten pre-COVID, pre-3%+ inflation, pre-tariffs, and pre-AI disruption.
The industry's answer to this dynamic is operational discipline. As the Bain representative put it, "12 is the new 5." A deal that would have generated strong returns on 5% EBITDA growth a decade ago, now requires 12%, given where entry multiples and interest rates sit today. Clearly, the days of easy returns are over. Panelist responses during the quickfire questioning round at the State of the Union 2026 panel made the consensus plain. Better management or financial engineering? "Better management." Scale or specialism? "Specialism." Multiple expansion or operational growth? "Operational growth. It's the only game in town."
Geopolitics - not a risk factor, but an operating environment
One keynote session reframed something the industry has been slow to accept: geopolitical disruption has long been treated as episodic - something to hedge, to price in or to wait out. The argument in Berlin was that it isn't, and won't be. Active military conflicts globally are at their highest level since World War II and energy security is no longer an ESG consideration but a national security one.
This has direct implications for private markets. Defence innovation, energy resilience, critical minerals, supply chain reshoring are no longer thematic bets. They’re the structural demand story of the next decade and are capital-intensive, politically sensitive and long-dated. It’s precisely the kind of opportunity that patient private capital is built to capture.
Counting the cost of AI
Two years ago the AI conversation in private markets was all about adoption. At this year’s SuperReturn it was about economics.
"CFOs don't know how to budget this," one speaker observed. "If you can't track usage, how do you know if it's productive?"
The $300 billion that evaporated from SaaS and software valuations in Q1 2026 wasn’t a general correction but a structural repricing, with markets making a judgment about the businesses AI strengthens and those it commoditises. Companies holding value are those where AI has moved into the execution layer, controlling workflows and operational outcomes. Those being discounted have added features without fundamentally changing what the business does or what it is worth.
Notably, not everyone at the conference agreed on the implications. Firms with deep software portfolios defended their positioning vigorously, while others, particularly those focused on hard assets and real economy businesses, were candid that they were glad to have limited exposure. This divergence of views was revealing. When cheap money and rising multiples were lifting everything, you didn't need to know where the deeper channels were located. Now that tide has gone out, not everyone agrees on where they are.
The fallout on fundraising
While the shift away from the old playbook is visible across every segment of the market, it is most apparent in fundraising. LP capital is concentrated among a diminishing number of managers and demand for capital significantly outstrips supply.In addition, the expectation that GPs demonstrate real distributions, not paper marks, is now firmly embedded. The consequences are severe for those who can't.
The market has bifurcated between general partners who understand the new rules and those still hoping for a return of the old ones. GPs who can show genuine operational value creation, a clear-eyed view of their portfolio, and a credible path to liquidity are raising capital. Those relying on vintage track records and waiting for the cycle to eventually turn are finding that LPs have stopped waiting. The standoff between GPs reluctant to crystallise exits below expectation and LPs unwilling to re-up without seeing distributions could take years to clear across the industry.
Europe offers some counterweight, as a market that’s three times less penetrated by PE than the US relative to GDP, is trading at a 30% discount to US public markets, and has a mid-market where competition for the best assets remains manageable. Several speakers representing global LPs noted that the geopolitical case for European reallocation has become difficult to ignore, with one panellist noting, "I need to be taking some money out of the US."
One of the more striking features of this year's SuperReturn was the significant level of disagreement, not only in individual panels but across the event as a whole. Firms with major software exposure fiercely defended it while those without were openly relieved. Some GPs were bullish on AI's near-term impact on returns while others thought the cost reckoning was still largely unpriceable. The geopolitical case for European reallocation was compelling to some allocators and insufficient for others.
This is, in its own way, an encouraging sign. The previous era rewarded consensus. Against a backdrop of low rates and rising multiples, all could largely agree on the direction of travel and argue about execution. Now, with that playbook looking dogeared, GPs are being forced to make specific, differentiated bets. And that means real, grounded, clearly articulated conviction has become the differentiator in a way it simply hasn’t been before.
The GPs we found most compelling weren't necessarily the largest in the room, nor always those with the strongest recent numbers. They were the ones who could address the simple question about what makes them different and why it matters, with clarity and authenticity. Some had built a coherent external narrative that held up under pressure from a sceptical moderator and a room full of peers with opposing views. Others became noticeably less convincing the moment the conversation moved from data to story.
In a market this competitive for LP attention, that distinction matters. Track record alone no longer guarantees success. Instead it’s those who have made their track record legible, supported with clear positioning, a consistent voice and an argument that survives contact with the difficult questions. That is not a communications afterthought, it’s part of the fabric.