The Ground Is Shifting Under Private Equity

SHIFT90 | POINT OF VIEW

The Ground Is Shifting Under the Mine

What the 2026 private credit crisis means for UK mid-market PE, and why customer truth is now a deal-critical asset

February 2026

The headlines are loud.

Public SaaS multiples have contracted sharply. Billions in market cap erased in days. Analysts debating whether this is cyclical correction or structural reset.

But the public market drawdown is not the main event.

The real pressure point sits in the $3 trillion private credit market, with hundreds of billions directly exposed to software assets underwritten on a specific thesis:

• Sticky recurring revenue.

• High switching costs.

• Predictable expansion.

• Durable cash flows.

That thesis assumed stability in buyer behaviour.

AI is now testing that assumption across every vertical.

• Reduced enterprise headcount.

• Compressed seat counts.

• Faster feature replication.

• Lower switching friction.

• Increased scrutiny on spend.

AI is rewriting the durability assumptions that private equity actually underwrites

And durability is what private equity actually underwrites.

The UK Mid-Market Is Not Insulated

The UK lower and mid-market operates at smaller cheque sizes. The structural assumptions are identical.

• Vertical SaaS businesses built on NRR expansion.

• B2B platforms dependent on perceived switching friction.

• GTM motions architected for a world where once a customer landed, they stayed.

The exposure is the same. Only the numbers are smaller.

There is a second pressure specific to the UK mid-market: fewer exit options.

The large PE buyers who would normally acquire portfolio companies are occupied managing their own distressed assets. The corporate acquirers who would normally buy for strategic fit are paused, focused on their own AI transitions. IPO markets remain effectively closed for sub-scale software businesses.

The result: PE firms holding software assets have fewer exit routes, and longer holding periods, than their models assumed.

Only software businesses that can demonstrate defensible demand and repeatable buyer logic will command premium exits.

Multiples follow confidence.

Confidence follows evidence.

The Real Risk: Vendor Assumption vs Customer Evidence

Most software investments are still underwritten on internal narratives:

• "We solve X problem."

• "Our ICP is Y."

• "Switching costs are high."

• "Retention is sticky."

These statements are often directionally correct.

But they are rarely validated through structured, independent customer evidence.

In a market where disruption risk is rising, assumption is no longer sufficient.

Four Shifts PE Should Institutionalise Across the Deal Cycle

These are not marketing upgrades. They are underwriting discipline.

1. Pre-Deal Customer Signal Validation

Five to six structured switch interviews, including recent churn, can surface:

1. The struggling moments that caused customers to act, and the specific trigger that moved them from passive to active.
2. What alternatives they evaluated, and what would cause them to leave.
3. Whether switching costs are structural or a product of convenience, and where AI exposure is real versus perceived.
4. Whether the ICP is genuinely defensible or built on historical pattern-matching.
5. How buyer behaviour is shifting — longer cycles, higher scrutiny, more self-education, more comparison.
6. The language buyers used internally to describe their problem, and the signals that preceded active search.
7. The internal jobs a buyer must complete to approve spend, and where friction stalls the decision.
8. Whether the team is equipped to build buyer confidence and internal consensus, not just manage pipeline activity.
9. The evidence base for repeatable struggling moments, validated switching rationale, and measurable confidence drivers.
10. The commercial outputs: more disciplined underwriting, faster post-close GTM alignment, durable revenue, and a cleaner exit narrative.

This becomes a Day 1 GTM asset, not a post-close discovery exercise.

Relative to the equity cheque, the cost is negligible.

2. Customer Intelligence for M&A and Equity Events

Year 1 churn destroys more investment theses than missed growth targets.

• Integration friction.

• Ownership change anxiety.

• Messaging drift.

• Roadmap misalignment.

Understanding precisely why customers switched, and what would cause them to switch away, allows leadership to proactively protect revenue.

In mergers and bolt-ons, this work identifies customer base overlap, fragility, or conflict before renewal cycles expose it.

3. Portfolio-Wide Customer Truth Extraction

For existing portfolio companies, the question is immediate.

AI is already reshaping buyer behaviour:

• Longer decision cycles.

• Higher economic scrutiny.

• More self-education.

• Increased comparison.

Traditional GTM optimisation yields diminishing returns in that context.

Extracting customer truth from current customers reveals:

• The real struggling moments that triggered action.

• The language buyers used internally to describe their problem.

• The signals that preceded active search.

This does two things:

1. Recharges messaging with buyer language.
2. Allows earlier engagement in the buying cycle, before the RFP defines the battlefield.

4. Buyer Facilitation Before CRM Expansion

The standard post-close playbook is predictable:

• Hire VP Sales.

• Implement CRM.

• Build SDR team.

• Increase outbound volume.

• Track pipeline metrics.

This is a supply-side, seller-optimised operating model.

It measures activity, not decision confidence.

In an AI-compressed market, the companies that win will be those that make buying easier, not those that make selling louder.

Buyer facilitation is the discipline of understanding and removing the friction that stops a qualified buyer from reaching a confident decision. In practice, that means:

1. Understanding the internal jobs a buyer must complete to approve spend.
2. Removing friction from each step.
3. Equipping buyers to build internal consensus.
4. Shifting metrics from activity to decision enablement.

Technology should support this. Not define it.

The Strategic Reframe

The largest risk facing software PE is that buyers are changing their minds about what software is worth.

When buyers start questioning whether a product is truly essential, the switching costs that made retention predictable begin to disappear. Customers who felt locked in start looking around. Renewals that felt certain become conversations.

When buyer logic changes, switching costs erode -> When switching costs erode, durability weakens ->When durability weakens, credit tightens.

The shift required is uncomfortable:

In the past decade of cheap capital, GTM precision was optional. It only needed to be present.

In the current environment, GTM precision is protective.

The software companies that will earn premium exits in 2026-2028 will not be those with the most features.

They will be those who can demonstrate pattern-driven growth:

• Clear, repeatable struggling moments.

• Validated switching rationale.

• Measurable buyer confidence drivers.

• Defensible ICP discipline.

And they will be able to prove it with customer evidence, not internal belief.

About Shift90

Shift90 is a B2B consultancy specialising in customer truth extraction and GTM optimisation for PE-backed software and technical services businesses.

We help investors and portfolio companies replace vendor assumptions with validated buyer evidence, enabling:

Customer truth is not a marketing asset. It is a deal asset. The ground is shifting. The firms that know why their customers buy, and can prove it, are the ones standing on solid ground.

mark@shift90.partners | www.shift90.partners