Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTMadeline ShiWed, June 17, 2026 at 1:57 AM GMT+2 5 min readPrivate equity dealmakers chasing software deals have found themselves running into a wall: Industry linchpins that had long been their go-to lenders for financing have gone quiet.The pullback from software lending, triggered by the threat of AI’s ability to upend businesses, spans across the private credit market, but some big managers have been particularly reluctant to add new software exposure, several industry sources told PitchBook.While some PE managers want to push ahead and buy companies they believe will thrive in the era of AI, their calls for term sheets are being turned down, causing frustration at the sudden retreat of longtime partners.“For some of these deals, lenders just say, ‘Don’t even think about it. We have too much software exposure. We are not going to fund another software buyout,” said one M&A lawyer, adding that they are working on two deals where the parties have completed due diligence, but no committed lender has been found.The squeeze signals a notable shift for a sector that has long been the driving force behind leveraged buyout activity.Roughly $17 billion worth of US software buyouts were closed or announced during the first five months of this year, according to PitchBook data. That figure is about half of last year’s pace and represents only 17% of the $99.2 billion recorded in the same period in 2022, which was the highest total in a decade.Deal count fell to 216, the second-lowest total for the first five months of a year since 2020, trailing only 2023.That contrasts with the accelerated pace seen in growth equity deals, where PE firms take minority stakes in businesses and typically do not require debt financing. PE firms inked 138 such deals through May this year—up roughly 30% from last year, though total deal value came in at just $2.74 billion.Blue Owl Capital, Blackstone, Apollo Global Management and BlackRock’s HPS Investment Partners are the types of lenders that have scaled back new loan originations in software, according to an investment banker who focuses on deals in the technology industry.Apollo has taken a cautious view on software since well before the AI-triggered anxiety roiled the SaaS market. At the Bloomberg Invest summit in March, CEO Marc Rowan publicly warned peers who appeared to have only recently woken up to AI risk: “If 30% of your portfolio is in one industry and that one industry is being impacted by technology, you have not been a good risk manager,” he said, according to Business Insider.Likewise, Blue Owl’s co-head of tech investing Erik Bissonnette said at a May earnings call that the firm anticipates “tempered” software deal activity “as the market recalibrates to current dynamics.” The firm also highlighted the opportunity to “revisit adjacent technology areas” that have always been in focus for it, such as digital infrastructure and life sciences, where it expects to “generate attractive, less correlated returns over time.”Terms and Privacy PolicyPrivacy & Cookie SettingsMore Info