AI Clogs Exits for PE-Backed Software Firms

Private equity firms are struggling to sell the software companies they acquired in a buying frenzy in 2021 and 2022, even though they enjoyed a rebound in sales for such companies last year. The lack of deals could force more PE firms to sell their holdings at a lower price, or even at a discount to the original deal price.

Sales did pick up last year but not enough to make a dent in the holdings they accumulated in the boom years. Last year PE exits, either public listings or sales, rose 76% measured by dollar volume compared to 2024, to $84 billion. Worries that older software firms are getting sidelined by new AI startups are making it harder for PE firms to list or sell their companies, according to some PE investors and their bankers.