Bain & Company is using AI to recreate software from acquisition targets, testing competitive advantages as generative AI disrupts the industry. The consulting firm's consultants use prompts to generate code replicas, assessing how easily target technology could be reproduced amid falling software development costs.

Rebecca Burack, head of Bain's global private equity practice, explained this approach helps buyers distinguish between code-based advantages and other competitive moats. What began in 2023 with specialized engineers now reaches rank-and-file consultants conducting AI diligence.

Public market investors have already punished software stocks, cutting over a third from Salesforce and ServiceNow valuations this year. Private equity activity contracted sharply, with tech transactions dropping 69% in early 2026 versus late 2025 according to KPMG.

Two Silicon Valley private equity firms told the Financial Times they slowed dealmaking, bolstering portfolio companies while scrutinizing AI risks. One investor noted a Bain-generated analytics platform recreation influenced their decision to exit bidding, highlighting how AI-powered due diligence is becoming a dealbreaker rather than just an evaluation tool.