Apollo president warns AI will disrupt 3 professional service sectors

Apollo Global Management co-president Scott Kleinman said artificial intelligence will disrupt law firms, accounting firms and consultancies, warning private equity investors to reassess holdings in professional services.

"I apologize to the lawyers, auditors and consultants in the room, but I do think that is an area that will face enormous pressure," Kleinman said Wednesday at the SuperReturn conference in Berlin.

Apollo has already reduced its exposure to software, shifting capital toward critical infrastructure and businesses less vulnerable to AI disruption, Kleinman said. The firm is underweight the software sector, he added, warning that private equity valuations for software assets have not kept pace with the repricing seen in public markets.

The warning carries weight because private equity firms have poured billions into professional services in recent years, treating accounting firms as stable cash-flow generators. Cinven acquired a majority stake in Grant Thornton's UK business in 2024. If AI erodes the billable-hour model, those investments may face writedowns.

Software Valuations Face Repricing Risk

Kleinman said software companies will not disappear, but "AI native" firms will put "enormous pressure" on traditional software businesses over time. He criticized the private equity industry for paying premium prices for software companies while assuming perpetual growth and margin expansion.

"The private equity industry fell in love with software, buying these companies at sky-high prices, assuming they would grow forever and margins would expand forever, but we all know nothing goes up forever," Kleinman said. "The question is what the next buyer will pay for these companies, and whether that price will come close to the multiple you paid."

The disconnect between public and private market valuations for software poses a risk for limited partners. Public software indices have repriced sharply as investors factor in AI competition, but many private equity-held software companies have not undergone similar markdowns, Kleinman said.

Apollo Shifts to Infrastructure

Apollo is directing capital toward critical infrastructure and businesses with limited AI exposure, Kleinman said. The firm's overall credit strategy has turned more defensive, reflecting a systematic repricing of AI disruption risk across asset classes.

The shift mirrors a broader reassessment underway across the $12 trillion private equity industry as institutional limited partners scrutinize portfolio exposure to sectors vulnerable to automation. Professional services firms — which generate revenue from human expertise billed by the hour — face particular scrutiny as large language models demonstrate the ability to draft contracts, audit financial statements and produce strategic analyses.

Apollo managed $733 billion in assets as of March 2026, making it one of the largest alternative asset managers globally. Its pivot away from software and toward infrastructure signals how major allocators are positioning for what Kleinman described as a widening circle of AI disruption — from software to the professional services that have long been considered recession-proof.

This article is for informational purposes only and does not constitute investment advice.