Private equity is sitting on over 30,000 companies it can't sell, and AI is making it worse.
Private equity is sitting on over 30,000 companies it can't sell. Whether you like private equity or not, that's a big number, and it's impacting the economy in a lot of ways.
For 10 years, the private equity playbook for software as a service was pretty straightforward. Buy recurring revenue, thin up the company, roll companies together where it makes sense, and profit on the back end. Lenders bought the same story. A lot of money flowed into this segment to drive those acquisitions, which also drove pretty high valuations.
AI poses a new risk to this whole model, and to all the acquisitions that were done and not yet sold. These small businesses never really had to ask whether they'd exist in five years. They had execution questions. Were they in the right market? Now there's an existential threat. Can AI do what they are doing? Can AI replace how this software was always sold?
Look at the scale. There are around 33,000 unsold PE companies as of mid-2026, up from 16,000 a decade ago. Bain says 32,000 of them total about $3.8 trillion in value.
What's keeping them from selling? They were bought at prices that, from a software perspective, were a lifetime ago. Those valuations don't exist in small software as a service anymore. And with AI, the world is becoming an even more winner-take-all market.
So the average hold on a business has grown to seven years, up from five. When no one buys, the fund sells to itself, in what are called continuation vehicles. They take on other debt and equity to pay out the original investors and keep holding the company.
Whether you like private equity or not, we all need to be aware of this trillion-dollar mark sitting out there, brought about by AI. At some point, it's going to come back into the economy.