During the COVID-19 pandemic, businesses and private equity (PE) funds acquired technology assets at record-high prices. Corporations also took advantage of the favorable market conditions to add software and technology assets to their portfolios.

Now, these vintage assets are reaching a maturity wall while investors are seeking returns on their investments after years of low deal volumes and no cash returns. At the same time, the disruptive potential of artificial intelligence (AI) is prompting a re-evaluation of business models.

Market conditions and valuations have changed. Top-tier assets can still sell, but lower-tier assets are less appealing, and a gap remains between buyer and seller expectations.

To maximize value recovery, firms have been moving beyond traditional exit routes, using continuation funds and minority stakes to realize value.

To navigate the 2026-2028 refinancing cycle, both corporations and PE funds need to employ rigorous debt maturity management, negotiation, and market positioning across:

• Due Diligence
• Risk Management
• AI

Market State – Vintage Maturity

During the COVID-19 pandemic, market conditions were favorable for acquisitions, and high multiples drove software and technology deal activity. In 2021 alone, there were 2,177 deals worth $359 billion in total value in the technology, media, and telecommunications sector^[1]. This included the $19.7 billion acquisition of Nuance Communications by Microsoft and Oracle's purchase of Cerner for $28.3 billion^[2].

Market confidence in the sector in part led to heightened technology deal activity and high multiples in 2021. Technology companies, particularly software-as-a-service (SaaS) organizations, had 10 years of consistent business development up to that point. Paired with significant dry powder available from newly raised funds, with $2.6 trillion raised between 2018 and 2021, this made technology acquisitions ideal for PE teams and corporates eager to deploy money^[3].

Moving Beyond Traditional Exit Routes

In response to longer holding periods, software and technology investors have turned to alternative strategies like continuation funds and minority stakes.

One such approach is the use of continuation funds, through which assets are transferred to a new vehicle to extend the holding period. Particularly prevalent in Europe, the Middle East, and Asia, continuation funds accounted for approximately one-fifth of all PE exits last year. Continuation fund investment volume reached $70 billion in 2024 and is projected to exceed $300 billion by 2034^{[7], [8].}

Many investors have also begun utilizing minority stakes, taking a minority role or selling majority stakes while retaining a minority stake to get cash off the table. This is due in part to buyers asking investors to remain invested in assets to share risk in return for higher valuations.

Recently, conversion vehicle deals have fallen through, and some PE firms have gone back to traditional sale processes. Others have pursued refinancing.

Navigating the Refinancing Cycle and Transactions

This higher bar is placing additional pressure on due diligence providers. Organizations are not just looking to ensure providers have performed the necessary work, but also assessing the level of detail provided and the feasibility of proposed adjustments.

Risk management must also remain central to the due diligence process, with serving as the foundation of both risk management and due diligence.

Proper data collection helps buyers stand on a more equal footing with sellers by revealing key risks and exposures of the asset. On the sell side, refinancing reports require accurate and detailed data. This creates both additional work and additional risk, particularly when paired with an ever-growing, wide-ranging distribution list.

With the proliferation of AI capabilities, many sell- and buy-side organizations have begun using these tools to support data collection and use. While they can expedite previously time-consuming tasks, including refinancing reports, the outputs need human intervention to ensure correctness and address any potential hallucinations.

AI in Vintage Assets 

AI also significantly impacts how funds and corporations approach hiring. Some businesses have reduced headcount by 10%–20%, with AI driving 60% of layoffs in the technology sector ^{[9], [10]}. It is likely that other companies will follow suit despite a lack of evidence that AI tools have enhanced productivity.

While many companies are replacing junior staff with AI, they run the risk of upsetting leadership pipelines. More sustainable models adapt trainings to the new AI-enabled landscape, enabling junior staff to complete a greater amount and variety of tasks with AI support while preparing them for future roles.

Although AI can perform much of the initial due diligence and data capture legwork, it is not right for every task. The goal is not just efficiency; it is also accuracy. AI outputs must be reviewed for errors and potential hallucinations. Failing to do so can increase risk and reduce trust among buyers, sellers, and investors. AI should not be used for a task if validating and verifying its outputs would take longer than completing the task manually.

Knowing how to use AI is also critical for successful transactions and refinancing. AI is a tool, and using it properly is a skill that can, and should, be learned. It can enable people to focus on more value-add activities throughout the due diligence, data collection, and refinancing processes.