The $1 Trillion Question Hanging Over Software: Is AI Reshaping M&A’s Favorite Sector?
Private equity and private credit have never been more concentrated in software. With AI challenging traditional SaaS models, investors are trying to determine whether the market is spotting a real threat—or inventing one.
For decades, Software-as-a-Service seemed like a sure bet. Recurring revenue from sticky contracts in mission-critical parts of every business, coupled with explosive growth, made the industry seem like a slam dunk.
This is why the private market embraced the sector so deeply. Apollo President Jim Zelter estimates about 40 percent of sponsor-based private credit and 30 percent of private equity’s committed capital currently sits in software, leaving both asset classes unusually levered to a single sector’s fortunes.