Analysis: PE exposure to Software booms amid sector reckoning

LCD News

Fri, February 20, 2026 at 11:24 PM GMT+9 1 min read

Exposure to software firms at US private equity shops rose meaningfully in 2025, leading to an elevated concentration in the segment just as public valuations of many software names are being reset due to fears of AI disruption. According to new analysis by PitchBook, software has represented roughly 14% of total US PE deal value over the past decade, totaling $121 billion in 2024. That share increased to 18% in 2025, with deal activity surging to $203 billion last year.

Other key takeaways from the analysis:

Public software multiples are down more than one standard deviation from their eight-year average due to the potential of AI disruption.

Despite that threat of disruption, structural frictions limit the pace at which there would be a wholesale displacement of many SaaS businesses by AI.

With challenges come opportunity: Periods of relative underperformance in technology-focused PE have historically created attractive deployment windows.

The full analysis, by PitchBook Senior Research Analyst Garrett Hinds and Senior Data Analyst Harrison Waldock, is available here.

Along with PE activity in the software sector, the analysis details:

Public software company enterprise value/sales multiple and 5-year Treasury rate

IRR: Diversified PE firms vs technology-focused PE firms

Takeaways on software/AI disruption from public PE firms’ recent earnings reports

Featured image by MicroStockHub/Getty Images/iStockphoto

This article originally appeared on PitchBook News

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