Technology has dropped in popularity among GP-led buyers as concerns over AI disruption reshape sector preferences, according to Houlihan Lokey's latest survey. The investment bank found that while business services remains the top sector, technology's appeal has waned significantly among the 58 secondaries buyers and sellers polled between November and January.

Michael Pilson, managing director at Houlihan Lokey, noted that technology-focused growth investments dominated continuation vehicle interest over the past five years. Now, however, investors are pivoting toward industrial assets and low-tech portfolio companies. Pilson observed that buyers are increasingly drawn to "old-economy portfolio assets" as they seek to fill the gap left by retreating tech investors.

This shift comes amid broader market uncertainty, with transactions already being paused due to technology disruption before this month's Middle East conflict. While Houlihan Lokey doesn't expect an improved M&A and IPO environment to reduce secondaries volume, the bank sees sovereign wealth funds and pensions pushing for longer-duration continuation vehicles beyond the typical five to seven years. The survey also revealed that most investors target 2x returns on both multi-asset and single-asset CVs, with nearly a quarter aiming for 2.5x or higher.