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| The Daily Pitch |
| PE, VC and M&A |
| Your edge on global private capital markets |
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| Good morning. In today's Daily Pitch, we look at skepticism toward private credit continuation funds, record-slow timelines for PE fundraising in Europe and how PE sectors may fare in 2026. |
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| PE is fueling the surge in enterprise SaaS M&A deals |
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By Michael Bodley, Sr. Venture Capital Reporter
M&A in the enterprise SaaS market is booming, with PE getting ahead of corporate acquisitions. There were 270 deals in Q3, including 63 estimates, amounting to $65 billion in overall funding, according to our latest Emerging Tech Research.
That marked an estimated increase of over 26% in total deal count quarter-over-quarter—capped off by 17 multibillion-dollar acquisitions and PE buyouts.
Corporate M&A activity typically accounts for two-thirds of all deals in the sector, with PE making up the rest, according to the report. But PE inked two of every three pacts in Q3. |
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Human resources tech startups fueled big-ticket buys, including Thoma Bravo and the Abu Dhabi Investment Authority's $12.4 billion buyout of Dayforce.
Meanwhile, corporates have remained quieter as growing VC-backed startup valuations have made acquisitions more expensive.
"[Startup investors are] not going to want a quick exit to a corporate, but rather grow quickly and get a PE to pay top dollar," said Derek Hernandez, a senior emerging tech analyst at PitchBook.
The opposite has historically been true, with corporates paying a premium to make strategic startup acquisitions, Hernandez said. But PE funds in recent quarters have been willing to pay more to acquire AI companies on the upswing, he said.
Corporates are still making strategic acquisitions, especially when they see an opportunity to modernize dated in-house operational tech.
“B2B SaaS corporates are almost exclusively making acquisitions that they feel will either make them defensible on the AI side or give them a path toward an AI product,” said Ankit Sud, a partner at venture growth firm NewView Capital.
"You're also seeing companies that are in data-management infrastructure getting excitement from corporates, because they realize that without modern data management, they won't be able to meet the moment on AI. Their infrastructure, as designed today, is not capable of AI innovation." |
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| AI is leading an exit market rebound—but can it sustain its pace? |
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Expansion-stage AI companies are powering a recovery in US exit activity, with AI exit value through September already more than double last year’s total. The latest edition of Deloitte’s Road to Next series examines whether AI’s momentum marks the start of a durable cycle or a flash-in-the-pan moment for the private markets. Highlights include:
- AI’s rising share of overall expansion-stage exit activity.
- Faster exit timelines and more financing rounds secured by AI companies.
- Greater scrutiny of potential “AI washing” as markets size up new investments.
- Regional and sector insights showing continued dominance by the Bay Area and software-as-a-service models.
Read it now |
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• Our 2026 Industry PE Outlook highlights trends like AI, reshoring and aging assets that are rewriting mature sectors. See the outlook
• Eight lenders took part in at least 60 deals each for US PE-backed companies in the Q3, with the most active two recording at least 80 apiece. Which firms led the way? See our latest PE Lending League Tables, sponsored by TPG Twin Brook Capital Partners.
• PE fundraising timelines in Europe have set a record for the third year in a row. At nearly 21 months, the median time to reach a final close in 2025 has roughly doubled compared to 2022. Read more |
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| Why do credit managers need continuation funds? |
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| (Josie Doan/PitchBook News) |
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By Madeline Shi, Sr. Private Equity Reporter
Private credit managers are increasingly using continuation funds to extend their hold on certain assets while they wrap up older funds.
These transactions have scaled up significantly over the past 12 months, leading to a flurry of $1 billion-plus continuation funds, including those launched by lenders like Antares Capital, BlackRock and TwinBrook Capital Partners—TPG's private credit arm.
While some have a strong rationale, questions remain about why an asset class built on contractual returns and predictable, medium-term maturities would require a mechanism that helps credit managers hold loans longer.
One such high-profile skeptic is Bruce Richards, the CEO and chairman of $24 billion credit hedge fund Marathon Asset Management, who recently wrote that continuation funds "should not be necessary for credit managers."
Funds that specialize in direct lending, the most popular strategy within private credit, typically originate first-lien, senior-secured loans with maturities of five to seven years, he noted.
This means that most of the distributions from private credit funds come in the first five years of a fund's life. What's left toward the end, when continuation fund deals are typically done, is not likely to be of high quality.
Some LPs have raised similar concerns. A senior investment manager at a corporate retirement fund told PitchBook that he was unsure whether continuation funds are holding "gems" or mature loans that "need more time to work out."
Still, many secondary buyers and advisers refute the notion that continuation funds are repositories for troubled loans. Most secondary capital today, they say, is chasing after highly diversified portfolios of senior secured, performing loans.
"Buyers look for downside protection, so there is an emphasis on as high a quality as possible," said Daniel Roddick, founder of secondary advisory firm Ely Place Partners. |
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Smart reads that caught our eye.
• Can stock markets handle incoming IPOs of private companies with outsized valuations? SpaceX's potential listing could open the floodgates for a 2026 IPO boom of $2.9 trillion worth of private companies. [Bloomberg]
• A Stanford experiment tested how good AI hacking tools really are. Humans might still be able to outsmart them, but the AI hackers are becoming dangerously good. [The Wall Street Journal]
• Is it OK for Lip-Bu Tan to serve as Intel's CEO and a VC investor at the same time? Tan is coming under fire for potential conflicts of interest as he balances his roles, investments and business decisions. [ | | | | | | | |
