Private Equity-Backed Technology Companies: Outlook for the Remainder of 2025

Following a Q2 of macroeconomic uncertainty, combined with policy reforms for deregulation under the Trump administration, including the "One Big Beautiful Bill" Act's that introduced tax provisions impacting private equity funds and portfolio companies, and increased investor appetite for AI infrastructure, cybersecurity, and digital enterprise solutions, the second half of 2025 is anticipated to be ripe for private equity-backed technology companies. However, some macro risks might need to be considered.   

In Q2, a series of policy developments have been a contributing factor to the trends seen in PE-backed tech companies. These include new appointees to the FTC and DOJ who are adopting a lighter-touch approach to antitrust scrutiny, accelerating M&A timelines, and new regulations that allow 401(k) plans to invest in private equity in their retirement plans. 

Key Takeaways  

• The second half of 2025 presents opportunities for private equity-backed technology companies, influenced by policy reforms under the Trump administration, which include favorable tax provisions and the deregulation of antitrust scrutiny. 
  
  
• PE firms are expected to continue investing in AI infrastructure, vertical SaaS, and cybersecurity due to AI's growing importance and the evolution of deal structuring to adapt to interest rate uncertainties. 
  
  
• Despite potential risks from semiconductor tariffs and lenient antitrust scrutiny encouraging acquisitions by larger tech companies, the outlook for tech-focused private equity remains positive, driven by fiscal incentives and strong exit performance. 

Why Private Equity in Tech is Poised for Growth  

The following are a handful of key reasons why technology companies will prove lucrative for private equity firms:  

• AI Infrastructure Playbook: PE firms are expected to continue acquiring and supporting infrastructure for AI, including data centers, GPU resource providers, and MLOps platforms.
  
  
• Roll-Up Resurgence: Vertical SaaS and cybersecurity are primed for sponsor-led consolidation plays, driven by scalable platforms and synergy capture.
  
  
• Deal Structuring Evolves: Given interest rate uncertainty, many firms are employing structured equity, earnouts, and seller financing to bridge valuation gaps.
  
  
• Regulatory Watch: Midterm elections in late 2025 may challenge or cement Trump-era deregulatory momentum. Policy stability remains a critical factor in PE deployment velocity.
  
  
• LP Sentiment: With stronger performance from tech exits and policy tailwinds, limited partners (LPs) may reallocate more aggressively to tech buyout funds, particularly those focused on AI, cloud, and cybersecurity.
  
  
• Public interest in developing AI: Quantum computers have spurred start-ups and small private company growth, and positive investor sentiment has subsidized their expansion.  

Risks to Consider   

However, possible risks to the growth of private equity-backed technology companies are a combination of the Trump Administration’s semiconductor tariffs and recent appointments to the FTC and DOJ.  

Semiconductors are an important component in tech companies, and the administration has proposed a 100% tariff on foreign semiconductors. Companies that promise to invest in the United States could be exempt from these tariffs. Tech giants like Apple have already proposed a $100 billion investment in the U.S.  

As production costs rise and leadership in the FTC and DOJ becomes more lenient, smaller private companies may be more likely to be acquired by large technology companies than to pursue private equity investments. This is because acquisitions may be met with friendlier outlooks at the DOJ, and larger companies will be exempt from the semiconductor tariffs. The pool of target companies for private equity firms may decrease as a result of the aforementioned factors.  

Strategic Positioning for PE Firms  

Private equity activity in the technology sector is expected to remain resilient for the remainder of 2025 on the heels of broader macroeconomic headwinds.  

With strong exit signals and improving capital markets, tech-focused PE firms are poised to capitalize on the next wave of digital infrastructure growth, especially in AI, cybersecurity, and vertical SaaS. While policy risks remain, the outlook remains constructive for sponsors positioned in mission-critical and growth-oriented technology subsectors.