Software buyouts hit a pandemic‑low, falling to $50 bn in the first five months of 2026 from $88 bn a year earlier. PitchBook data shows the sector’s first‑quarter deal value slid from $24 bn in January to just $5 bn in May, reflecting investors’ wariness about AI’s impact on recurring revenue models.

Executives argue that without clarity on post‑AI valuations, private‑equity committees lack a basis to approve deals. Paul‑Noël Guély of Arma Partners noted that uncertainty around AI adoption makes it hard to justify investment, a sharp reversal from last decade’s boom when software firms attracted debt‑heavy buyouts.

The slowdown signals a broader shift: firms now split software types by AI vulnerability, and dealmaking will only revive once valuations stabilize. HG’s $500 mn purchase of Rightsline marks a tentative return, but legal counsel David Walker warns that confidence remains low in AI‑prone sectors.

Investors face a dilemma: either wait for clearer valuation signals or pivot to software niches less exposed to AI disruption, a move that could reshape the industry’s capital structure.