Clearlake Capital co-founder José E. Feliciano warns that AI disruption has created a challenging environment for software buyouts, calling current valuations a 'four-letter word.' Speaking at PE Hub's NEXUS 2026 conference, Feliciano explained that investors are lumping all software companies together, creating opportunities for those who can identify resilient businesses with deep customer relationships and ecosystem advantages.

Feliciano sees three categories emerging in the AI era: vulnerable tool providers, established companies with strong incumbent relationships, and AI-native businesses creating new products. While traditional software buyouts face headwinds, he believes alternative structures like PIPEs and carve-outs will unlock value. The market overreaction in public markets, he notes, often precedes opportunities in private equity.

Separately, Blackstone's energy transition fund BETP acquired Arlington Industries, a family-owned electrical products manufacturer, for its portfolio of power connection and distribution products. The Scranton-based company, founded in 1949, serves commercial and industrial markets including data centers. BETP sees growth through add-on acquisitions of complementary US-based electrical component companies, capitalizing on building electrification and data center expansion.