Private equity dealflow has worst second quarter since 2020; VSS takes minority stake in Cordoba amid generational reinvestment in its infrastructure

Good morning, PE Hubsters! Rafael Canton filling in for MK Flynn for the US edition of the Wire from the New York newsroom.

Let’s begin the week with a look at dealmaking activity. PEI Group data journalists Rashida Kamal and Mariam Lobjanidze analyzed the stats from S&P Global Market Intelligence in our quarterly M&A report for Q2 2026, published earlier this morning. We’ll look at main takeaways from the report, which you can read here.

Earlier Monday morning, PE Hub was first to reveal that VSS Capital Partners has taken a minority stake in engineering, construction and program management company Cordoba.

Dashed optimism

Q2 2026 was yet another slow quarter for dealmaking. According to PE Hub’s analysis of S&P Global Market Intelligence data, Q2 saw 937 private equity deals, 560 of which were exits. Though there was a modest reduction from last quarter, when we saw 1,067 deals and 636 exits, it’s in comparison with other second quarters where the slump really shows.

This Q2 fall is not dissimilar to what we had reported for Q2 of last year, wrote Rashida Kamal and Mariam Lobjanidze from PEI Group’s data journalism team. The optimism from the start of the year simply had not materialized into plentiful deals by the second quarter in 2025. This again seems to be the case for 2026. The comparison last year doesn’t end there – this year’s second quarter overtook Q2 2025’s record for the worst second quarter since the start of the pandemic. While this may be impetus enough to throw optimism out the window, there is a data-backed reason to be more hopeful for the second half of the year: with the exception of 2022, H2 has performed better than the first half for the period studied.

Something similar may yet happen for 2026, validating some of the optimism we have heard from dealmakers. PE Hub senior reporter Michael Schoeck, who has been tracking companies coming to sale, has been briefed on 150-plus companies coming to market in the near term.

Of course, the reasons for a slow dealmaking in 2025 – Liberation Day and tariffs – were quite different from this year, when a number of ongoing global events, from AI disruption to downstream effects of the blockaded Strait of Hormuz, may have made the market more turbulent for otherwise eager dealmakers.

PE Hub editor-in-chief Mary Kathleen (MK) Flynn sat down with Clearlake Capital co-founder José E. Feliciano earlier this year at PEI Group’s NEXUS 2026 conference and had a chance to talk about the effects of AI disruption in the private equity world.

Feliciano noted: “In the short term, doing a buyout of a software business or a take-private of a software business right now is probably a four-letter word.”

This idea is certainly borne out by the data – of all industries this quarter, TMT saw the biggest drop in the number of deals relative to this time last year.

Most other industries saw a minor drop in deal count and largely held onto their positions relative to last year, regardless of war and global trade disruptions. Healthcare, a sector that has recently seen deal sizes climb, saw its median deal size for the quarter shoot up to over $1 billion (this number is high, but tamer when we look at the median value for all of 2026 so far).

The healthcare industry saw the biggest deal of the quarter. Blackstone, TPG Global and others bought Hologic, a women’s healthcare company, in a take-private acquisition for $18 billion. PE Hub first covered the deal announcement in 2025.

Read more analysis on the second quarter data, including robust deal size figures for the financials and industrials sector, in the full article.

Generational reinvestment

Earlier Monday morning, PE Hub was first to reveal that VSS Capital Partners has taken a minority stake in Cordoba, a Los Angeles-based engineering, construction and program management company.

“The US is in the middle of a generational reinvestment in its infrastructure across transportation, water systems, grid modernization, energy transition and public facilities, among others,” Sai Parepally, a principal at VSS, explained to PE Hub senior reporter Obey Martin Manayiti. Parepally co-led the deal with VSS managing partner Jeffrey Stevenson.

“We have seen forecasts that US construction spending will total more than $2 trillion annually, with public infrastructure and institutional work being the strongest and most resilient segments. We think there are a lot of tailwinds within this market,” he added.

Founded in 1983 by George L Pla, the company focuses on program management and construction management, serving as the project owner’s representative, managing the engineers and contracts, controlling the schedule and budgets and making sure that the project owner’s goals are fulfilled.

Demand for Cordoba’s services is also expected to come from the growing buildout of data centers to support the proliferation of AI.

“We view AI as a net positive and believe there is no way AI can reasonably displace the need for infrastructure itself,” Parepally told Obey. “On the contrary, the buildout of data centers has created considerable knock-on effects driving the modernization of power, water and other infrastructure to support them.”

The US has a data center space problem, with vacancy rates hovering around 1 percent in some parts of the country, as PE Hub previously reported. PE firms are filling in by providing infrastructure services that support the construction of data centers, such as power, grid and water infrastructure.

To scale Cordoba, VSS is looking at employing an M&A strategy. Parepally described the project management space as fragmented. That will give room for the company to find the most relevant partners, he added. Organic strategies will also be on the table.

“The fragmentation allows Cordoba to find the right firm to partner with,” he said.

That’s it for me. If you have any questions, thoughts, or want to chat about deals in the tech, consumer or sports sectors, please email me at rafael.c@pei.group.

Tomorrow, Craig McGlashan will write the Europe edition of the Wire, while Obey Martin Manayiti will be with you for the US edition.

Cheers,

Rafael