Excess Returns · Friday, August 28, 2026
Dan Rasmussen estimates that by 2021, software and healthcare technology comprised over 40% of private equity investments, with deals done at "crazy prices." He questions the intangible value of many of these sub-scale software businesses, suggesting they might be generic rather than possessing strong IP moats.
“By my estimate, probably 40 percent plus of of private equity by 2021 or so was software or healthcare technology, which was basically healthcare software. Um, uh, and so you had to call it 40 percent of the money during that period going into software or healthcare businesses. Um, at crazy prices.”
“It's unclear to me that there was all that much intangible value at these things. Like yes, they were software businesses, but were they, did they really have this IP moat, this talent moat, or were they kind of generic, crappy software businesses that had captured a certain market share in a niche?”
“And I don't know what your research shows on that when you go down into small caps and how software scores in intangible value.”