AI advances complicate private equity exits in software, with median hold times around 5 years.

Recent advances in artificial intelligence are making it harder for private equity firms to exit their investments in software companies. The median holding period for North American private equity portfolio companies is about 5.4 years, and just 5 years in the technology sector, including software. Since 2015, software company buyers have paid a median of 4.1 times trailing-12-month revenue, but many potential buyers are public software firms facing stock price declines. This environment complicates exit strategies for private equity owners of software businesses.