• AI fears sparked a broad equity selloff last week, hitting enterprise software and private markets.
  • Two of the largest software-focused buyout firms, Thoma Bravo and Vista Equity Partners, publicly pushed back against disruption fears.
  • Both firms signalled confidence in portfolio durability and long-term demand for enterprise software.
  • Investors should watch deal activity, portfolio guidance and software vendors’ AI adoption signals.

What happened

Last week’s equity selloff — driven by fresh concerns that new AI automation tools could disrupt enterprise software — rippled into private markets. Software stocks and valuations came under pressure as investors questioned whether automation would reduce demand for existing enterprise applications or speed consolidation.

The selloff prompted a re-examination of software valuations across the public and private spectrum, and created anxiety among buyers, sellers and limited partners in buyout funds.

How the buyout firms responded

Thoma Bravo and Vista Equity Partners, two of the largest buyout firms focused on software, moved to reassure stakeholders and counter the growing narrative that AI will imminently hollow out enterprise software demand. While neither firm’s detailed comments are quoted here, both signalled that they see reasons for confidence: mission-critical software, long-term contracts, recurring revenue models and the ability to integrate new AI capabilities into existing products.

Their responses reflect a common private‑equity playbook: buy and build strategies, active portfolio management, and time horizons that tolerate short-term market volatility. For companies under private ownership, that translates into a capacity to invest in product pivots, R&D and go‑to‑market changes without the quarter-to-quarter pressure public companies face.

Why this matters

The reaction from top software buyout firms is important for three reasons:

  • Social proof: When major industry players publicly push back against a narrative, it can calm market panic and influence sentiment among other investors.
  • Deal flow: If buyout firms remain confident, acquisition activity and fundraising may be less disrupted than broader market moves suggest.
  • Product strategy: Portfolio companies owned by active managers can be faster to adopt AI features that complement—not simply replace—their core offerings.

That said, uncertainty remains. AI will change how some software is built and consumed. The immediate market reaction exposed gaps in investor expectations about timing and the scale of disruption.

What to watch next

Investors and market watchers should pay attention to a few indicators that will show whether the reassurance holds:

  • Quarterly guidance from public enterprise software firms and any changes in subscription renewals.
  • Deal announcements or pauses from large buyout firms and strategic buyers.
  • Product roadmaps and announcements showing how AI is being integrated into mission‑critical applications.

For now, the message from Thoma Bravo and Vista is a reminder that private equity has tools to manage transition risk — but investors should still watch results and buyout activity closely as the AI story develops.

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