Anthropic raised $65 billion in a single round in May, more than the $56.6 billion Electronic Arts take-private that Bain calls the largest buyout on record, according to the a16z Blog analysis by Jen Kha.
Is private equity cooked? Not entirely, but the 2021 vintage of levered software buyouts is.
The question is why limited partners keep re-upping with the same tech buyout managers when the model looks strained. Kha, a partner at Andreessen Horowitz, argues tech buyout is a late-cycle asset class that works when business models are predictable enough to borrow against, while venture shines when a new technology wave drops. That pattern held through the internet build-out and again through mobile and cloud, when top quartile venture beat top quartile buyout, and reversed for vintages caught in the dot-com bust from roughly 1998 to 2005.
Tech buyout is simple to define. It is the strategy of buying a mature company outright, loading debt onto its balance sheet, and trying to grow earnings and pay down that debt before selling. The work that has to change now sits with two groups. Chief financial officers at PE-backed software companies must cover interest that no longer fits cash flow, and limited partners who set pacing budgets must decide whether to keep funding buyout re-ups or chase continuation vehicles and NAV loans that just move risk.
Kha says the stress shows first in marks. In the first half of 2026, venture funds marked their tech companies up 16%, while buyout funds marked tech holdings down only 4%, per the a16z Blog. That gap matters because venture marks rise when an outside round validates price, while a buyout mark is set behind closed doors by the owner. When no buyer appears, sponsors increasingly sell the company to a continuation vehicle, which is a new fund they also manage that buys the asset with secondary capital. Those vehicles made up 14% of PE exit value in the first half of 2026, up from 5% in 2020, according to Jefferies data cited by the a16z Blog.
The daily brief
Get the free daily brief with the day's AI news, new AI startups and funding rounds every morning.
Join 64,000 other subscribers.
The math that made the 2010s golden has flipped. Bain estimates rising multiples powered over 50% of buyout returns that decade, while global buyout assets under management grew from $1.6 trillion in 2015 to $3.9 trillion in 2021, per the a16z Blog. Over the last 10 years, US buyouts returned 14.5% a year and trailed the Russell 3000, even with leverage, while US venture returned 17.6% a year unlevered, 2.3 points ahead of the index. Middle-market PE-backed companies now carry 4.7 to 6.0x adjusted EBITDA in net debt across the 2019 to 2025 vintages, roughly 2.5 to 3 times the median S&P 500 company at 2x, according to J.P. Morgan cited by the a16z Blog. Hold times stretched to about 7 years on average, up from 5 to 6 years in 2010 to 2021.
Distributions tell the sharper story. DPI, or distributions to paid-in capital which measures cash actually returned, was 5.3x for a top 5% US venture fund in the 2007 to 2016 vintages versus 3.5x for a top 5% US buyout fund, per the a16z Blog. TVPI, or total value to paid-in capital which includes unrealized value, was nearly 2.2 times better for top venture. Kha notes venture track records have stayed predictive of the next fund, while top quartile buyout performance since 2000 has not reliably predicted the next fund.
So what actually happens inside the 2021 deals? Many cannot cover interest in cash and use PIK, or payment-in-kind which adds unpaid interest to the loan balance. Loan-to-value for those borrowers went from 44% to 75% in a year, per the a16z Blog. Seventy percent of the debt foreclosed in 2025 to 2026 came from 2021 or 2022 deals, and private equity firms backed 54% of the largest US corporate bankruptcies during 2025. The example is Medallia, which Thoma Bravo bought in 2021 for about $6.4 billion and this year handed to lenders led by Blackstone (NYSE:BX), wiping out about $5.1 billion of equity.
The next question investors ask is whether cheaper debt will fix it. A few rate cuts help service costs but do not recreate low-rate multiple expansion, a steady supply of fixer-uppers, or willing buyers for aging application software whose own acquirers have seen shares fall. PE-backed tech exit value is down 77% from a year earlier, per the a16z Blog, while buyers with capital are paying for new technology like Nvidia (NASDAQ:NVDA) agreeing to buy Hugging Face for $13 billion or SpaceX acquiring Cursor for $60 billion, both cited as examples in the essay. About $140 billion of risky loans owed by PE-backed companies mature in 2028 and another $160 billion in 2029, versus about $60 billion two years out on average in 2023 to 2025, with about a third in software and a quarter already rated CCC+ or below, per the a16z Blog. Public lenders already hint at the gap. Business development companies heavy in software trade well below NAV, and default rates range from 1 to 3% to about 15% depending on what you count, while realized losses are still under 1%.
Fundraising reflects the squeeze, down 16% in 2025 to $395 billion and still lagging at midyear 2026, per the a16z Blog. Outside the numbers, sentiment has turned. Negative comments about private equity and corporate landlords have risen sharply in 2026, the Financial Times reported, according to a November 2026 CEPR publication. Tech exposure complicates it further. Tech went from 23% of buyout deal value in 2018 to about one third not long after ChatGPT launched in late 2022, before PE began to retreat, per the a16z Blog. Golub Capital finds its software borrowers went from 9% revenue growth to under 3% in two years, with EBITDA still growing on margin, not on the 10 to 12% EBITDA growth Bain says a typical deal now needs to make 2.5x in five years versus about 5% in 2015.
Venture companies are priced differently, on revenue growth of about 18 to 30% at the median, with outliers like Revolut at 46%, Databricks at 80% plus, SpaceX at 92% and Anduril at 100% plus, per the a16z Blog. Kha is blunt about alternatives that look like diversification but are not. Private credit loans to SaaS companies grew from about $8 billion in 2015 to more than $500 billion by the end of 2025, according to BIS data cited by the a16z Blog, but the lender's upside is capped at interest. Secondaries mostly buy existing buyout stakes at a discount.
If you hold 2021 to 2022 buyout vintages, ask your manager how much interest is being added to the loan and what the actual exit route is before the 2028 maturity wall arrives.
