Private equity deal activity in the software sector across the US and Europe has sharply declined to its lowest level since 2020.
According to an analysis by Gain.ai of the past six years, US software PE exits, which previously averaged around 16 percent of the total market, have dropped to just 10 percent this year.
In Europe, the decline is even more pronounced: software PE exits, which averaged 9 percent of the market, have fallen to only 4 percent.
The same trend applies to new deal entries in both regions. The uncertainty surrounding AI is the primary driver of this slowdown. Buyers are struggling to determine whether AI will expand a software company’s market or render it obsolete, leading many to adopt a wait-and-see approach.
Additionally, the wide bid-ask spread remains a significant obstacle. While high-quality assets exist in both public and private markets, sellers are unwilling to accept current price levels. The market’s recovery in the second half of the year will be closely watched.
