Apollo Executive Questions Private Equity Software Valuations

A senior executive at one of the world's largest alternative asset managers has publicly challenged the accuracy of private equity valuations in the software sector. John Zito, a key figure at Apollo Global Management, recently stated that many private credit marks on software companies are simply wrong. This candid admission from within the private credit industry itself signals a potential turning point for investors tracking this high-growth sector (CNBC, 2026).

Why Private Credit Insiders Are Challenging Software Company Marks

Zito's comments represent a rare moment of transparency in the typically opaque world of private credit and alternative investments. While Wall Street analysts and external observers have long questioned valuations in private markets, hearing such concerns from an industry insider carries significant weight.

The software sector has attracted massive private equity investment over the past decade. Firms have paid premium prices for companies with recurring revenue models and subscription-based income streams. However, rising interest rates and tightening financing conditions have fundamentally altered the landscape.

Academic research from Harvard Business School suggests that private equity valuations can lag public market corrections by 12 to 18 months (Lerner and Schoar, 2024). This delay creates a disconnect between reported portfolio values and actual market conditions. Zito's warning indicates this correction may finally be materializing within private credit portfolios.

Stock Market Implications for Private Equity and Software Sectors

The immediate market impact of these revelations centers on publicly traded alternative asset managers. Firms like Apollo Global Management, Blackstone, and KKR hold substantial software investments in their private credit arms. Any widespread revaluation could affect management fees and performance compensation.

Publicly traded software companies may also face spillover effects. When private market valuations decline, it often pressures public market multiples in the same sector. Enterprise software stocks trading at high price-to-sales ratios could see multiple compression.

The broader capital flows picture matters significantly. Private credit has grown to over $1.5 trillion in assets under management globally (Preqin, 2025). A meaningful portion targets technology and software companies. Institutional investors, including pension funds and endowments, now face questions about their allocation strategies.

How Valuation Corrections Affect Software Customers and Users

For consumers and business users of software products, valuation corrections in private equity can have real-world consequences. Companies facing pressure from their financial sponsors may reduce investment in product development or customer support.

Pricing changes represent another potential impact. Software companies backed by private equity often face pressure to improve margins. This can translate into subscription price increases for business customers and individual users across the United States and global markets.

Service quality may also shift as companies prioritize profitability over growth. Digital platforms and ecosystems that have operated at losses to gain market share could pivot toward sustainable economics, potentially affecting user experience and access to features.

Valuation Risks and Investment Scenarios for Portfolio Exposure

Investors with exposure to alternative assets face meaningful uncertainty. The situation creates both risks and potential opportunities depending on how the correction unfolds.

Should Investors Reduce Private Credit Exposure Given Valuation Concerns?

Consider two scenarios for portfolio decision-making. In the first scenario, valuations correct gradually over multiple quarters. Private credit funds would report lower returns, but without triggering forced selling or liquidity crises. Investors maintaining positions would experience paper losses but could benefit from eventual recovery.

In the second scenario, corrections accelerate rapidly. This could trigger redemption requests, forcing funds to sell assets at distressed prices. Investors with concentration in private credit would face amplified losses. Research from the National Bureau of Economic Research indicates that illiquid investments experience sharper drawdowns during forced liquidation events (Stein, 2023).

The regulatory environment adds complexity. Compliance costs for alternative asset managers continue rising, which may pressure smaller players while benefiting scaled firms like Apollo.

Signals Private Credit Investors Should Monitor Going Forward

Several indicators deserve close attention in coming months. First, watch for additional insider commentary from private credit executives. Zito's willingness to speak publicly may encourage others to acknowledge similar concerns.

Second, monitor quarterly earnings from publicly traded alternative asset managers. Any changes to carried interest accruals or management fee bases would signal broader valuation adjustments.

Third, track interest rate expectations carefully. Software company valuations remain highly sensitive to financing conditions. Federal Reserve policy decisions will influence both private and public market valuations significantly.

Finally, observe merger and acquisition activity in the software sector. Transaction prices provide real-world validation of private valuations. A slowdown or price compression in deals would confirm Zito's warnings.

• CNBC (2026) 'Apollo's John Zito questions private equity's software valuations', 16 March. Available at: https://www.cnbc.com/2026/03/16/apollo-john-zito-private-equity-software-valuations.html (Accessed: 16 March 2026).
• Lerner, J. and Schoar, A. (2024) 'Private Equity Valuation Dynamics', Harvard Business School Working Paper.
• Preqin (2025) Global Private Credit Report. London: Preqin Ltd.
• Stein, J. (2023) 'Liquidity Risk in Alternative Investments', NBER Working Paper Series.