AI disruption risk is becoming a deal-killer in private equity. Tobias Haefele, founder of AI advisory firm Riplo and former AI adviser to Hg, tells Side Letter that at least one fund client has "walked away" from a deal after analysis revealed severe potential for AI-driven disruption to portfolio company value.

In other market movements, one of Space X's biggest backers has returned to the market seeking new capital commitments. Meanwhile, Apollo alum Harris has successfully persuaded a limited partner to cross the aisle, marking a notable talent shift in the industry.

These developments underscore how AI's rapid advancement is reshaping investment due diligence. Funds are increasingly scrutinizing target companies' vulnerability to AI disruption, with some opting to abandon transactions entirely rather than bet on business models that may be rendered obsolete. The trend suggests AI risk assessment is becoming a standard pillar of PE deal evaluation alongside traditional financial and operational due diligence.