FBFK Law Managing Shareholder Paul Braswell shared his perspective with PitchBook, discussing software buyout financing trends as private equity software deals face a tighter lending market and AI-related uncertainty reshapes lender appetite.
The article, “PE firms want software deals, but lenders don’t want to fund them,” examines how lenders are reducing their exposure to software, how borrowing costs are rising, and how private equity sponsors are using alternative financing structures to bridge the financing gap.
Paul noted that debt now often accounts for 40% to 45% of the purchase price on buyout deals, down from the 60% level commonly seen in prior years. The article also discusses how some private equity firms are using a mix of buyer equity, seller reinvestment, and preferred equity from LPs to address the financing gap.
