The exit window isn’t exactly throwing confetti
Private equity has spent years buying software companies, polishing them up, and waiting for a neat little exit via sale or IPO. But AI is now muscling into the middle of that plan, changing which software businesses look valuable and which ones suddenly feel a lot more replaceable.
Why this matters
With Intelligence data shows the median hold time for North America-based private equity portfolio companies at exit was 5.4 years in Q4 2025, and five years in the technology sector specifically. That’s not just a trivia stat — it’s a reminder that buyout returns can get stuck in traffic when the market decides the old software playbook needs a rewrite.
The AI problem, in plain English
If you own a software company built around a narrow workflow, AI can be both a buzzkill and a boost:
- Buzzkill, because buyers may worry the product gets commoditized fast
- Boost, because AI features can make a business look more strategic — if the company can actually prove it
- Result: more diligence, more uncertainty, and potentially fewer quick exits
Big picture
For private equity, the lesson is simple: in an AI-heavy world, “we’ll sell it later” is becoming a lot less of a strategy and a lot more of a hope. Longer holds can still work, but only if the portfolio company can stay relevant while the software market keeps reinventing itself.