{"text":[[{"start":9,"text":"Software buyout deals have collapsed to the lowest levels since the Covid-19 pandemic, as the threat of AI disruption paralyses dealmaking in a sector that last year was one of the hottest targets for private equity firms. "}],[{"start":23.15,"text":"In a sign of how rapidly advances in AI are forcing buyout firms to rethink the sector’s future, the value of software deals fell to $50bn in the first five months of 2026, from $88bn in the same period last year, according to PitchBook data analysed by the FT."}],[{"start":42,"text":"It marks the lowest total for the first five months of a year since 2020, when the pandemic unleashed turmoil in financial markets and hammered the global economy. "}],[{"start":53.5,"text":"Industry executives say the steep drop reflects not only the conviction that AI will have far-reaching repercussions for the business models of software companies, but also the challenge facing buyout firms in picking winners and avoiding the losers. "}],[{"start":67.3,"text":"Paul-Noël Guély of Arma Partners, specialist tech banking firm specialising in the tech industry, said: “Until an investor knows what a business may be worth post-AI adoption, it’s impossible for them to make a case to their investment committee.”"}],[{"start":82.35,"text":"The uncertainty stalking the sector is an abrupt reversal from the last decade, when software companies’ recurring revenues and frequently captive customer base made them an attractive target for debt-based buyouts."}],[{"start":94.6,"text":"Last year, private equity firms struck $290bn worth of software buyouts, the highest total for 11 years, according to Pitchbook data."}],[{"start":103.94999999999999,"text":"In an indication of how swiftly the picture has changed, 2026 will be the weakest for dealmaking in the sector since 2018 if the pace of the first five months of the year continues."}],[{"start":115.29999999999998,"text":"Fears that software companies’ business models would succumb to AI’s advances exploded at the start of the year when US group Anthropic launched a range of productivity tools that challenge existing software programmes."}],[{"start":128.95,"text":"Some of the concern has focused on the growth of so-called AI agents, tools that can do routine tasks and replace traditional software. "}],[{"start":138.14999999999998,"text":"Analysts have said they could threaten business models tied to the number of employees using a particular software programme."}],[{"start":145.39999999999998,"text":"With the AI boom showing little sign of slowing this year, monthly dealmaking has dwindled from a high of $24bn in January before falling to $9bn in February after new tools from Anthropic had a chilling effect."}],[{"start":161.39999999999998,"text":"In May, the value of deals — both announced and completed — dropped to $5bn, compared with $29bn in the same month last year, according to the data."}],[{"start":170.64999999999998,"text":"Doubts over the durability of the sector have dogged both private equity groups and private credit funds, which have also been big backers of software companies."}],[{"start":180.89999999999998,"text":"Private equity executives said that firms were starting to draw clearer lines between types of software companies when assessing their vulnerability to AI. "}],[{"start":190.24999999999997,"text":"“Dealmaking will resume at pace once valuations have clearly settled,” said Guély of Arma Partners."}],[{"start":197.69999999999996,"text":"The rout that ripped through publicly listed software companies in the first quarter has abated, with the S&P North American technology software index rebounding from a low touched in April."}],[{"start":209.34999999999997,"text":"Last month, HG, one of Europe’s biggest technology investors, agreed to buy US royalties management Rightsline for about $500mn, in its first buyout since the software sell-off at the start of the year."}],[{"start":222.89999999999998,"text":"ButDavid Walker, a lawyer at Latham & Watkins, an adviser to private equity firms, said that he had yet to see any signs of recovery in dealmaking in the software sector."}],[{"start":234.04999999999998,"text":"He added that there was “much more confidence in dealmaking in sectors that are more resilient to, and less impacted by, AI change”. "}],[{"start":251.79999999999998,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780905995_7802.mp3"}