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PE isn’t biting on the software valuation dip yet. US PE software deal value fell to $10.7 billion in the second quarter of 2026, down 65.7% year-over-year and 90.3% below its Q3 2025 peak, according to the Q2 2026 US PE Breakdown. The sector that anchored PE returns for a decade has become the one sponsors are least willing to touch.
Buyers are staying away, and the reasons compound.
Private credit, software’s usual financing engine, is still stabilizing after the SaaS-pocalypse reset in early 2026, with lenders openly trimming their exposure to the sector. No one is rushing to untangle it all. There’s no confident answer yet for how a software company transitions to agentic-as-a-service and stays relevant against frontier AI models, and until that resolves, this is a dip few managers care to catch. The deals may yet come, but not this quarter.
That leaves a genuinely open question: What becomes PE’s next favorite sector?
Energy is one contender, with YTD deal value of $68.3 billion, up a striking 80.5% versus H1 2025, as data center demand reshapes the supply and demand balance across the grid. Still, most of that strength landed in Q1, and conviction is building faster than deployment.
As capital has crowded toward hard assets, energy names now trade at material premiums to their historical valuations, which turns the search into the oldest game there is, finding an attractive entry price and a credible value-creation setup rather than simply buying the theme.
Where sponsors did commit this quarter, they favored the asset-heavy and the slow-to-obsolesce, from KKR’s roughly $10 billion Helix Digital Infrastructure formation to Stonepeak and Bernhard Capital’s roughly $6 billion buyout of the regulated Louisiana utility Cleco, and CVC Capital Partners’ acquisition of IFF’s food ingredients business.
The backdrop to all of it was a broad retreat. Total PE deal value fell to $177.3 billion in Q2, down 37.5% QoQ and 23.9% YoY, even as deal count held roughly flat QoQ and rose 11.5% against last year. Sponsors kept transacting, just in smaller sizes, pressured by elevated rate expectations amid an energy price surge and renewed inflation worries.
The full report fills in the rest, covering the deals, exits, the valuation split by size, the credit backdrop, and where sponsors are placing their remaining conviction, alongside hot takes from our latest survey.
Download the Q2 2026 US PE Breakdown for the complete picture. |
