A majority of private equity deals involve acquiring successful, founder-owned businesses in unglamorous sectors. These founders often lack a succession plan, making their profitable, cash-flowing companies—like plumbing or cabinet manufacturing—ideal targets for PE firms seeking stable returns.

Beloved but financially underperforming brands like Bumble, Snap, and Pinterest are now key M&A targets. The likely acquirers are not traditional tech or PE firms, but AI companies like OpenAI seeking to rapidly acquire large user bases and proprietary data sets to train their models and scale distribution.

For many high-flying companies from the 2021 peak that are now struggling with growth, the original IPO aspiration is unlikely. Accel's Miles Clements suggests now is a great time to be in the LBO business. Private equity firms will provide the necessary homes for these businesses, offering an exit path different from what founders initially envisioned.

A significant shift has occurred: private equity firms are no longer actively pursuing acquisitions of solid SaaS companies that fall short of IPO scale. This disappearance of a reliable exit path forces VCs and founders to find new strategies for liquidity and growth.

Bending Spoons operates as a tech-focused version of Berkshire Hathaway, acquiring digital businesses like Evernote and AOL with the intent to hold and operate them forever. They use a large, in-house team of technical and product experts to radically transform these assets, funding new acquisitions from their balance sheet rather than operating as a traditional private equity fund that buys to flip.

A PE firm buying a company validates a large market. Post-acquisition, they often cut costs and deprioritize product, creating a 2-4 year window of vulnerability. This is an opportunity for a startup to enter the market with a superior product and capture share.

Unlike PE firms that flip companies, Bending Spoons acquires digital businesses to own permanently. Their model focuses on deep operational overhauls—rebuilding software, redesigning UI, and restructuring organizations—rather than making shallow management changes, creating long-term value through operational excellence.

Italian firm Bending Spoons is successfully acquiring beloved but struggling internet brands like Evernote and Vimeo. By cutting costs, raising prices, and consolidating back-end operations, they create a profitable portfolio of SaaS companies with strong recurring revenue, proving a value-investing model works for tech.

Bending Spoons' model is to acquire mismanaged but valuable internet assets cheaply. They then operate them for cash flow by consolidating functions, slashing costs like customer service, and milking enterprise contracts, much like a traditional PE firm.