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| The Daily Pitch |
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| Software has been PE's crown jewel for more than a decade. With roughly 18% of US PE deal value flowing to the sector in 2025, the asset class is now exposed to a public valuation reset and intensifying AI disruption. Our new analyst note covers how AI is reshaping underwriting and assesses whether today's compression signals panic or opportunity. |
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| Mister Car Wash is once more in private hands |
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By Rod James, Senior Private Equity Editor
Mister Car Wash said yesterday it will be taken private by Leonard Green & Partners, marking the return of the business to its former owner and ending a thoroughly disappointing spell in the public markets.
At the time of its 2021 listing, Mister Car Wash was seen by many as a PE success story. The business grew from 65 locations in 2010 to 344 by the end of March 2021, hoovering up and rebranding smaller peers across the US.
The company debuted in New York on June 2, 2021, its stock price jumping 49% on the first day.
Mister Car Wash's high-level financial performance has been steady. But it has continued to be punished by public investors. The company's share price has fallen by around 70% from its July 2021 peak of $23.53, and its market capitalization had fallen 22.6% year-over-year as of Tuesday.
The company is in many ways a victim of its own success. Leonard Green's initial acquisition in 2014 triggered a wave of transactions by other PE firms pursuing roll-up strategies. |
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Investment bank Raymond James counts at least 18 platform investments in car wash companies by PE firms since 2014, with Golden Gate Capital, Wafra, Oaktree, Warburg Pincus and New Mountain Capital among those to have gotten in on the game. The company has also been hurt by a high debt load and weak free cash flow, a product of its rapid expansion.
News of the take-private was well received by shareholders. Mister Car Wash's share price was up around 16% at market close yesterday.
CEO John Lai said in the announcement that the take-private will allow Mister Car Wash to invest "more boldly" in its stores, people and technology and help fulfill its aim of tripling in size. |
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• Fears about AI disruption to leveraged software companies have set off alarm bells for investors to weigh the credit risk implications for their loan portfolios and holdings in the sector. Read more
• VC capital is more concentrated in Europe as investors focus on a handful of winners—down rounds are declining again as a result. Find out more |
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| Dealmaking roars back in aerospace, defense |
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By Jim Corridore, Senior Industrials Research Analyst
In a year defined by tariff noise and geopolitical tension, aerospace and defense stood out as a sector where structural tailwinds overpowered macro hesitation.
PE dealmaking in the space snapped back in Q4, rising 64% year-over-year and 30% quarter-over-quarter—driven by improved US government clarity on military priorities and continued deal activity in commercial aerospace parts, according to our latest report on the industry.
For the full year, PitchBook estimates 357 PE deals closed in 2025, up over 24% from 2024. Total estimated funding rose 19% to $55.6 billion. |
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Commercial aerospace led the way. Estimated deal count rose 15% to 135, while total deal value nearly doubled to $25.5 billion. Airlines continue to fly older aircraft, stretching fleet lives and fueling steady demand for parts and aftermarket services.
At the same time, improving production stability at major OEMs has reinforced confidence across the supply chain. Boeing, for example, is starting to improve operationally after a period of turmoil and FAA-imposed restrictions on its production rates. The result has been sustained investor appetite for long-cycle, high-visibility aerospace assets.
Airlines and airline services tell a more nuanced story. Estimated deal count declined, but aggregate funding increased, pointing to fewer transactions but larger, scaled platforms changing hands. Investors appeared more selective, concentrating capital in companies with durable, recurring revenue tied to flight activity.
Several large deals illustrated that trend. Space-tech specialist Arka Group was taken private in a $2.6 billion LBO in December. The parent company of Italian airport operator Save Group was taken private for $2.2 billion in November, and KKR sold aerospace parts specialist Novaria Group for $2.2 billion the same month.
The defense industry benefited from multi-year contracts, rising defense budgets and more clearly outlined government priorities in a world where security concerns are rising. With Q4 momentum carrying into the new year, the sector enters 2026 with the wind at its back. |
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Smart reads that caught our eye.
• As AI-driven data center spending surges, Wall Street is trying to turn AI chips and computing power into tradable financial assets. [The Economist]
• In 2026, job hopping is no longer a viable strategy to increase your salary. ADP analysts say that the job-hopping hack is losing its effectiveness in a low-hire, low-fire job market. [Fortune]
• Norway is once again dominating the winter Olympics. They let kids be kids. And it works, writes Steve Magness. [Substack] |
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