The rules governing mergers and acquisitions (M&A) have changed for private equity firms seeking to exit investments. Successful exits are now dependent on three key factors: proving AI resilience, implementing smarter sale processes, and adopting a more pragmatic approach to valuation.
Earlier this year, a significant sell-off in software stocks, referred to as the “SaaSpocalypse,” highlighted how rapidly AI can influence company valuations. Businesses that previously commanded high multiples are now being scrutinised by buyers who want to understand if their competitive advantage will endure the next wave of AI adoption.
Firms are under continued pressure to return capital to investors, with the value of global private equity exits decreasing to $96bn in the first quarter of 2026, according to Preqin. Buyers are increasingly seeking proof that a company possesses defensible advantages, such as proprietary data or trusted customer relationships, and that management is actively using AI to strengthen the business.
In this evolving market, buyers are becoming more selective. They are less willing to commit resources to broad auction processes without confidence in an asset's value. This has led to a focus on identifying the right buyers early and providing them with information to build conviction. Early access to management teams is also becoming more important for buyers to test responses to AI-driven change.
AI has also altered how businesses are valued. Infrastructure services, engineering, and other asset-backed sectors are becoming more attractive due to their combination of stable earnings and capabilities that are difficult to automate. High-quality software and data businesses still attract attention if they can demonstrate clear differentiation and a compelling AI proposition.