Software and technology M&A update: H2 2025

Here are some key takeaways from the report:

• The global software and technology (S&T) sector delivered modest gains in the second half of 2025 amid persistent macroeconomic uncertainty, tariff pressures and geopolitical volatility.
• The BT Capital software-as-a-service (SaaS) Index underperformed benchmark indices such as the S&P 500 and IGV, though a handful of categories, including business and analytics and development and operations (DevOps), posted notable gains. Palantir Technologies Inc. and Snowflake Inc. were standout performers, driven by accelerating AI demand.
• SaaS merger and acquisition (M&A) activity remained robust, reaching a new high in deal volume and sustaining elevated valuations for a second consecutive year. SaaS accounted for roughly 58% of total software M&A, consistent with historical trends but boosted by broad-based growth in AI-driven transactions.
• “A” assets, especially those enabling mission-critical workflows, AI infrastructure, cybersecurity and data platforms, saw intensifying competition from both strategic buyers and financial buyers, with take-private transactions continuing to surge.
• Looking ahead, the emergence of autonomous AI and the advancement of AI “agents” capable of performing complex sequences of tasks with minimal oversight represent the next major milestones for the sector that could materially expand the software and technology market over the coming years.
• Valuation multiples across public SaaS companies saw a modest recovery in H2. Categories such as DevOps and enterprise resource planning (ERP) and supply chain software continued to command premium revenue multiples relative to peers. Adoption of these solutions remains a strategic priority across enterprises of all sizes, as companies increasingly seek to innovate, optimize operations and capture efficiency through digital transformation.
• U.S. deal count represented a little less than half of global activity and private equity remained a central force behind both domestic and cross-border dealmaking, targeting businesses with sticky recurring revenue, durable growth and strong margin profiles.
• H2 also saw several significant transactions across both enterprise and mid-market segments, along with numerous strategic add-ons aimed at strengthening product portfolios and accelerating AI-driven transformation.