Private equity (PE) has pulled back from the average B2B SaaS startup, particularly those around $20 million in annual recurring revenue (ARR). While technology M&A volumes hit a record $587 billion in 2025, the growth wasn't uniform. The data shows that five megadeals accounted for nearly half of the transaction value, while average deal sizes for smaller companies dropped by 17%. PE firms are focusing on AI-driven growth and hot sectors like security and fintech, leaving traditional SaaS models without a clear path to acquisition. From 2012 to 2023, startups could rely on a straightforward PE playbook: reach $20 million ARR, maintain strong net revenue retention, and show steady growth. Those companies could expect appealing multiples, often between 4x and 10x ARR. Now, with rising interest rates and a challenging exit environment, that safety net has disappeared. The growth expectations have shifted dramatically; PE is no longer interested in companies that only show 20% growth when they can find AI-accelerated firms boasting 100% growth rates. For founders, this means they need to rethink their strategies. Simply reaching a certain ARR isn't enough anymore. Growth has become crucial again, and AI isn't optional. If a company can't demonstrate a clear connection between AI and improved customer success or growth, it risks being overlooked by potential acquirers. The IPO landscape is also narrowing, as fewer high-quality companies are going public. Founders must now choose between aggressively pursuing growth or adjusting costs for long-term sustainability. The middle ground that once existed for PE exits is largely gone, pushing many to adapt quickly or face tougher futures.