Private Equity-Backed Technology Companies: Outlook for 2026

A Glance at What’s Ahead 

The outlook for private equity (PE) investment in technology companies in 2026 appears optimistic, especially after navigating macroeconomic turbulence and liquidity constraints in prior years. Here’s what’s contributing to the favorable backdrop for dealmaking, including improved internal rates of return (IRR) and portfolio growth:  

• Interest rate cuts in late 2025 
• Improving credit conditions 
• Accelerating adoption of artificial intelligence (AI)  

In addition, as IPO windows reopen and strategic acquirers remain active, thereby offering a wider range of exit alternatives, continuation funds are expected to moderate as traditional exit pathways regain momentum. As a result, as this year progresses, the private equity industry is expected to see liquidity and reinvestment into growing technology companies.  

Considerations for Success this Year 

There are some considerations private equity funds in the technology industry need to take into account amid increased competition for investor capital, namely, having a differentiated investment strategy. Additionally, as AI drives operational efficiencies and new growth opportunities, private equity‑backed technology companies that fail to adopt it risk falling behind. 

Finally, private equity-backed technology companies are still expected to encounter challenges, including valuation pressure, geopolitical risks, and execution complexity. Ultimately, your success will hinge upon: 

• Disciplined underwriting 
• Operational value creation 
• Agility in navigating evolving market dynamics 

Improving Liquidity Opportunities 

Private equity funds should see stronger liquidity as they pursue technology investments. Last year’s growth in the private credit market expanded the available capital, and that momentum is expected to be carried forward. 

According to Dechert, almost two-thirds of private equity firms use private credit to support acquisition financing in their portfolios. Moreover, almost half of private equity firms worldwide say they use private credit for general corporate borrowing at the portfolio level.  

According to Morgan Stanley, although the Federal Reserve has started reducing interest rates, the cuts have been minimal. However, private equity funds that use private credit capital to make investments in the technology sector are encouraged to consider the private credit market’s rapid expansion and limited regulation, which has drawn concern.  

In addition, the expansion of the secondaries market has allowed private equity-backed technology companies to obtain capital while awaiting exit opportunities, giving them additional time to develop products, prepare for public market regulations, or wait for deal opportunities.  

Steady Momentum for Deal Activity in the Technology Space 

The technology dealmaking trends from 2025 are expected to continue their momentum in 2026. These include:  

• AI and data infrastructure: Sponsors are slated to continue aggressively pursuing AI-related carve-outs and growth equity rounds, paying premium multiples for companies enabling cloud analytics and machine learning. 
• Cybersecurity consolidation: Roll-up strategies are still on track for acceleration, with top-tier assets commanding 7–8x revenue multiples, reflecting strong demand for mission-critical solutions. 
• Cloud & DevOps platforms: Mid-market firms are expected to favor buy-and-build strategies in fragmented infrastructure sub-sectors, targeting SaaS models with recurring revenues. 

Platform leveraged buyouts (LBOs) are projected to represent 25% or more of total private equity deal activity in 2026, signaling a shift back to larger, standalone acquisitions as financing becomes more accessible. 

Positive Market Prospects for PE Tech Companies in 2026 

The momentum is strong for private equity-backed technology companies, underpinned by AI innovation, sector-focused capital, and improving liquidity. While competition for premium assets is expected to intensify, firms that combine operational excellence with strategic foresight are positioned to deliver superior returns.