On March 10, Worthington Steel reduced the mandatory threshold of its voluntary takeover offer for Kloeckner & Co to 57.5% and extended the acceptance period to March 26, 2026. The announcement, buried in regulatory filings and corporate press releases, tells a far more consequential story about modern M&A than the steel industry consolidation it appears to describe.

Let me translate what CEO Guido Kerkhoff actually meant when he called this adjustment "logical and common" to increase transaction security. What he meant was: we needed this deal badly enough to compromise on our original terms. What he did not say was why that compromise has become emblematic of a broader strategic realignment happening across corporate America as AI disruption collides with traditional dealmaking.

As of March 9, Worthington Steel had secured approximately 56.9% of Kloeckner's issued share capital. The mathematics are straightforward—they needed breathing room. But the strategic implications run deeper than steel processing synergies.

The Great Software Repricing

While Worthington Steel demonstrates tactical flexibility in industrial M&A, an entirely different drama is unfolding in boardrooms across the technology sector. Leading software names like Salesforce, ServiceNow and Adobe are down more than 14% after badly underperforming the market a year ago. This is not market volatility. This is repricing.

There will be increased pressure on AI companies to show profitability, which will put more pressure on these AI companies to eat into the territory of many software players. The result will be boardrooms of software companies that are keenly aware of this risk and more than happy to sell to private equity or a cash-rich strategic at less than stellar premia.

The elegant irony here is unmistakable. Software companies spent the last decade building what they believed were defensible moats through recurring revenue models and customer lock-in. Anthropic's Claude Code and other "vibe-coding" startups are disrupting traditional SaaS by allowing users with no coding experience to build software. That's dramatically lowering the programming skill barrier and undermining rigid, one-size-fits-all SaaS products.

Suddenly, those premium multiples look less like strategic positioning and more like expensive mistakes.

The Private Equity Reckoning

Addressing a gathering in Toronto last fall, one executive said that the real threat for private capital markets wasn't tariffs, inflation or a prolonged period of elevated interest rates. Rather, "the real risk is—is software dead?"

That question, posed by an Apollo Global Management executive, represents perhaps the most honest assessment of private equity's current predicament. Software became one of the largest sector exposures across both private credit portfolios and publicly traded business development companies. According to S&P, software & technology companies account for roughly 25% of the private credit market through year-end 2025.

The mathematics are unforgiving. At the end of 2022, on the eve of ChatGPT's launch, software companies traded at an average EBITDA multiple of 30. By the end of 2025 that figure had fallen to 22, and today the median multiple on forward profitability is only 16.

This is not cyclical repricing. This is structural obsolescence being priced in real time.

Strategic Implications for the C-Suite

What connects Worthington Steel's threshold adjustment to the software sector's existential crisis? Both represent boardrooms adapting their capital allocation strategies to new realities. The difference is execution speed and strategic clarity.

Boards should make sure their governance and expertise can support fast-paced deal decisions, align committee responsibilities and tap external experts so that potential transactions receive rigorous, timely oversight. The board should establish clear guidelines for evaluating M&A targets—and be prepared to walk away if they aren't met.

Worthington Steel exemplifies this discipline. They recognized market conditions, adjusted terms pragmatically, and maintained deal momentum. The company expects a "decent recovery" in 2026, with North American steel demand increasing 1%–2% year-over-year, while noting uncertainty tied to Middle East conflict developments and trade policy. They are buying into a recovery thesis with clear operational logic.

Contrast this with software company boards still hoping their AI narrative will somehow restore their 2021 valuations.

The New M&A Landscape

Momentum heading into 2026 suggests that global M&A is entering a new phase. A late-2025 surge in megadeals and AI thematics have carried into the new year, pointing to a market that is structurally reshaping rather than simply rebounding from a subdued cycle. Deal value is expected to remain elevated in 2026 even as volumes remain muted, with headline-making activity increasingly concentrated in the largest transactions and among the best-capitalised buyers.

This concentration of deal activity among well-capitalised buyers creates a two-tier market. Companies like Worthington Steel, with clear industrial logic and patient capital, can execute complex cross-border transactions. Meanwhile, several midsized software companies will seek financing options, potentially spurring acquisitions by private equity.

But here's the strategic catch: private equity firms are simultaneously the most likely buyers and the most exposed to the sector's decline. Their private-equity side could be hit because software is rerated lower, which may mean less carry for tech-exposed investments. And on the private credit side, there's risk of redemptions and, worst case, defaults. UBS estimates default rates could rise to 13% for private credit firms in the U.S. if AI triggers a big disruption.

This creates fascinating strategic arbitrage opportunities for industrial acquirers with strong balance sheets and clear operational synergies.

The Threshold Principle

Worthington Steel's threshold adjustment offers a masterclass in strategic pragmatism. Rather than adhere to arbitrary numerical targets that could torpedo an otherwise sound transaction, they recognized that deal completion creates more value than perfect terms.

The deal creates the second largest steel service center company in North America with over $9.5 billion of combined revenue and anticipated synergies of $150 million of highly actionable, identified annual run-rate synergies.

This is capital allocation as it should be practiced: clear strategic rationale, realistic execution parameters, and pragmatic adjustment when market conditions require it.

The software sector's boardrooms would benefit from similar clarity. Instead of waiting for valuations to recover or hoping AI disruption proves less severe than feared, smart boards are already having succession conversations and strategic alternative discussions.

Orlando Bravo, co-founder of software-focused buyout firm Thoma Bravo, sees value in companies building their own agentic solutions. "We're seeing just incredible buying opportunities right now," Bravo told CNBC. He said his firm is doing deals and "will be a lot more active."

The difference between Bravo's confidence and broader market anxiety? He understands which software companies have defensible characteristics and which are riding on expired assumptions about competitive moats.

Conclusion: The New Strategic Discipline

The lesson from Worthington Steel's threshold adjustment extends far beyond steel processing. In an environment where traditional strategic assumptions are being stress-tested by technological disruption, the most successful boards will be those that maintain strategic clarity while demonstrating tactical flexibility.

Boards must focus on building—and maintaining—the capacity to provide rigorous oversight and serve as a strategic sounding board. Boards that lean in—probing deeply into execution and asking tough questions about progress, impact, and capabilities—are the boards that will write the success stories of 2026 and beyond.

The threshold principle applies beyond M&A mechanics. It represents a fundamental shift toward strategic realism over strategic wishful thinking. Companies that adjust their thresholds—for deal terms, for acceptable returns, for strategic assumptions—will navigate this disruption successfully.

Those that maintain rigid adherence to pre-AI strategic frameworks will discover that their thresholds become irrelevant when nobody wants to cross them.