Blab Tech
Apollos Scott Kleinman Warns AI Will Target Professional Services Next
Apollo Global Management co‑president Scott Kleinman warned at a SuperReturn panel in Berlin that artificial intelligence is poised to turn its sights on the professional‑services sector—law firms, accountancies and consulting firms—after the software industry has already felt the AI punch.
Kleinman’s remarks come as Apollo pivots away from software toward critical infrastructure and other lower‑risk businesses. Bloomberg reports that Apollo is now “massively underweight” software, redirecting capital toward sectors that are less exposed to AI‑driven cost cuts.
The software sector has been the primary target of generative‑AI disruption. Models that can write, test and maintain code have forced many software companies to reassess their business models. Apollo’s own portfolio mirrors this trend: the firm has not marked down its software holdings as aggressively as public markets, yet it cautions that “AI‑native” firms will eventually squeeze legacy software businesses.
Private‑equity firms have increasingly turned to professional‑services companies for stable cash flow. In 2024, Cinven bought a majority stake in Grant Thornton’s UK business—a move that illustrates the sector’s appeal to buyout shops. Kleinman urged PE owners to evaluate whether the professional‑services firms they hold could be replaced or augmented by AI.
While software remains a key area for Apollo, the firm’s strategy is defensive. “The private‑equity industry fell in love with software, decided to pay ungodly prices for these businesses on the assumption that they keep growing forever and their margins would keep expanding forever,” Kleinman said. He added that the next buyer’s willingness to pay for legacy software will likely be lower than the multiples paid in the past.
The implications for professional services are significant. AI can automate routine tasks—document review in law firms, bookkeeping in accountancies, data‑driven analysis in consulting—potentially forcing firms to cut staff or shift to higher‑value services. Apollo’s warning signals that private‑equity owners should monitor AI adoption within their portfolio companies and consider restructuring or divestiture if AI threatens profitability.
Apollo’s broader portfolio includes $840 billion of assets under management, with $99 billion in private equity and $392 billion in credit. The firm’s shift toward critical infrastructure aligns with its defensive stance on credit and real assets, as detailed in its 2025 annual report. By contrast, Apollo’s investment in software remains substantial, but the firm is preparing for a future where AI‑native companies dominate the market.
In short, Apollo’s co‑president has highlighted a potential shift in AI disruption from software to professional services. Private‑equity firms that have invested in law, accounting and consulting should evaluate the impact of AI on their portfolio companies. Apollo’s current strategy—underweighting software, focusing on infrastructure, and scrutinizing professional‑services holdings—reflects a broader industry reassessment of AI’s long‑term effects on business models.
The situation remains fluid. Apollo has not announced any immediate divestitures or new investments in professional‑services firms, and it has not released a formal policy on AI integration. The firm’s next public statements, earnings releases or portfolio updates will likely clarify how it plans to navigate the evolving AI landscape.
Kleinman’s remarks come as Apollo pivots away from software toward critical infrastructure and other lower‑risk businesses. Bloomberg reports that Apollo is now “massively underweight” software, redirecting capital toward sectors that are less exposed to AI‑driven cost cuts.
The software sector has been the primary target of generative‑AI disruption. Models that can write, test and maintain code have forced many software companies to reassess their business models. Apollo’s own portfolio mirrors this trend: the firm has not marked down its software holdings as aggressively as public markets, yet it cautions that “AI‑native” firms will eventually squeeze legacy software businesses.
Private‑equity firms have increasingly turned to professional‑services companies for stable cash flow. In 2024, Cinven bought a majority stake in Grant Thornton’s UK business—a move that illustrates the sector’s appeal to buyout shops. Kleinman urged PE owners to evaluate whether the professional‑services firms they hold could be replaced or augmented by AI.
While software remains a key area for Apollo, the firm’s strategy is defensive. “The private‑equity industry fell in love with software, decided to pay ungodly prices for these businesses on the assumption that they keep growing forever and their margins would keep expanding forever,” Kleinman said. He added that the next buyer’s willingness to pay for legacy software will likely be lower than the multiples paid in the past.
The implications for professional services are significant. AI can automate routine tasks—document review in law firms, bookkeeping in accountancies, data‑driven analysis in consulting—potentially forcing firms to cut staff or shift to higher‑value services. Apollo’s warning signals that private‑equity owners should monitor AI adoption within their portfolio companies and consider restructuring or divestiture if AI threatens profitability.
Apollo’s broader portfolio includes $840 billion of assets under management, with $99 billion in private equity and $392 billion in credit. The firm’s shift toward critical infrastructure aligns with its defensive stance on credit and real assets, as detailed in its 2025 annual report. By contrast, Apollo’s investment in software remains substantial, but the firm is preparing for a future where AI‑native companies dominate the market.
In short, Apollo’s co‑president has highlighted a potential shift in AI disruption from software to professional services. Private‑equity firms that have invested in law, accounting and consulting should evaluate the impact of AI on their portfolio companies. Apollo’s current strategy—underweighting software, focusing on infrastructure, and scrutinizing professional‑services holdings—reflects a broader industry reassessment of AI’s long‑term effects on business models.
The situation remains fluid. Apollo has not announced any immediate divestitures or new investments in professional‑services firms, and it has not released a formal policy on AI integration. The firm’s next public statements, earnings releases or portfolio updates will likely clarify how it plans to navigate the evolving AI landscape.
