Private equity software buyouts fall to lowest level since 2020

In short: Private equity firms are doing fewer and smaller software buyouts as they struggle to judge how AI will change software companies’ value.

What's going on

Private equity firms, investors that buy companies and try to improve them, are pulling back from buying software businesses. The total value of software buyout deals in the first five months of 2026 fell to $50bn, down from $88bn in the same period last year, according to PitchBook data analyzed by the Financial Times.

That is the lowest start to a year since 2020, when the Covid-19 pandemic disrupted markets. It is a sharp change from last year, when private equity firms completed $290bn of software buyouts, the highest total in 11 years.

People in the industry say the big issue is uncertainty about AI. Investors are worried that new AI tools could replace parts of today’s software, or change how software companies charge customers. Some of the concern is about “AI agents,” which are tools that can carry out routine tasks on a user’s behalf (like a digital assistant that can actually do the work, not just give advice).

This fear grew early this year after Anthropic launched new productivity tools that compete with existing software. Deal value hit $24bn in January, then fell to $9bn in February, and dropped to $5bn in May. May last year was $29bn.

What to watch

Investors say deals may pick up again once prices settle and buyers can better estimate what software companies will be worth after customers adopt AI. For now, advisers say there is more confidence in sectors seen as less affected by fast changes in AI.

Source: Financial Times