Private equity remains one of the key drivers of deal activity in the IT sector, but the rules of the game have changed.
Bain notes that the buyout market will still be operating with significant dry powder in early 2025: while the volume of uninvested capital fell slightly from USD 1.3 trillion to USD 1.2 trillion, the share of “old” dry powder—unused for four years or more—rose to 24%. PwC summarizes this well: private equity remains a driver of dealmaking, but now operates in an environment of more expensive capital, more difficult exits, and an AI revolution that creates both opportunity and uncertainty.
In the IT sector, in particular, this makes private equity more active, not more passive. PwC Netherlands explicitly cites IT, software, and semiconductors as sectors where significant investment opportunities are expected by 2025. KPMG also expects private equity to play a dominant role in TMT M&A, supported by record levels of dry powder and more flexible private credit financing, with a particular focus on software, cybersecurity, and fintech.
That makes sense. IT assets lend themselves relatively well to buy-and-build strategies, international expansion, operational value creation, and margin improvement. At the same time, we’re seeing that private equity buyers have become more selective about where they play that game. In the IT & Business Services sector, Hampleton notes that buyers are applying increasingly disciplined target selection criteria and filtering based on platform completeness, proof of profitability, compliance readiness, and ease of integration. This suggests that the era of “growth at any cost” is behind us; the focus is shifting toward companies that are not only scalable but also professionally manageable and easy to integrate.
For entrepreneurs in the IT sector, this means that private equity remains a highly relevant source of capital, but that the pitch to investors needs to be more focused. Today, a compelling equity story relies less on revenue growth alone and more on recurring revenue, pricing power, sector focus, AI upside, the quality of management information, and the credibility of the “buy-and-build” thesis. Especially now that exits may take longer, funds want greater certainty at the time of investment that value creation is operationally feasible. This interpretation follows from Bain’s observation of persistent pressure on dealmakers due to aging dry powder, combined with PwC’s and KPMG’s expectation that PE will, in fact, remain active in the technology sector.
In short: private equity in IT is shifting from financial engineering to execution-led value creation. This is beneficial for strong companies with scalability options and less so for those that are still heavily dependent on project revenue, key personnel, or a proposition that is too broad.
