Apollo’s Kleinman Says AI to Come for Professional Services Next

Professional services, including law firms, accountancies and consulting firms, are likely to be the next sector to face disruption from artificial intelligence, according to Apollo Global Management Inc.’s co-president, Scott Kleinman.

Investors have had their worries focused on the software sector, and the extent to which AI will upend these businesses. But going forward, buyout shops should be looking at investments in professional services, Kleinman said on a panel at the SuperReturn conference in Berlin on Wednesday.

“Apologies to the lawyers, accountants, consultants in the room, but I do think that’s a place where you’re going to see a lot of pressure,” Kleinman said.

Private equity shops have funneled money into professional services firms, particularly accountancies, in recent years as many have looked for new sources of cash. Cinven, for example, bought a majority stake in Grant Thornton’s UK business in 2024.

Going forward, buyout firms should evaluate whether any professional services companies they’ve invested in can be replaced or supplemented by AI, Kleinman said.

The software sector still poses an issue for private equity firms, many of which haven’t marked down their investments in the space at the same rate as the public markets have, according to Kleinman.

While software companies aren’t “going away,” ones that are “AI-native” are “going to put enormous pressure over time on legacy software businesses,” he said.

“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. “But as we know, nothing grows to the moon. It’s a question of what is the next buyer going to pay for these companies and is it going to look anything like the multiple you paid for it?”