As we jog towards fall routines and functioning, Software Equity Group has shared their M&A Public Market Report from Q2.
According to their analysts, for software executives and investors, “the central takeaway is that strong financial performance remains necessary, but it is no longer enough on its own to support a premium outcome.
The businesses best positioned in this environment are those that combine durable growth, disciplined profitability, strong retention, and differentiated products with proprietary data, embedded customer workflows, and a credible ability to use AI to strengthen their value proposition over time.”
Here are 3 highlights from the report:
1. Aggregate software M&A volume declined to 972 transactions in 2Q26, the first quarter since 2Q24 with fewer than 1,000 announced deals. Activity fell from 1,118 transactions in 1Q26 and 1,204 in 2Q25, although TTM volume remained essentially flat YoY at 4,437 transactions.
The decline suggests that broader public market uncertainty and increased selectivity may be beginning to influence software M&A, even as overall activity remains historically elevated.
2. SaaS M&A proved more resilient. The quarter recorded 698 transactions, up 9.6% from 637 in 2Q25, while TTM volume increased 16.0% to 2,784 deals, the most active period tracked.
Based on first-half activity, 2026 is currently pacing broadly in line with the elevated level reached in 2025. Thus, there hasn’t been a negative impact yet to SaaS M&A as a result of the public market turbulence and AI uncertainty.
3. AI-referenced SaaS transactions increased from 472 in 2019 to 1,872 in 2025, while the first half of 2026 added another 1,028 deals. In 2Q26 alone, 542 AI-referenced acquisitions represented 77.7% of all SaaS M&A, compared with 66.2% in 2Q25 and 54.1% in 2024.
Major transactions spanned coding, infrastructure, customer service, data collaboration, and biometric security, illustrating how broadly AI is reshaping the software landscape. For software executives and investors, the broader takeaway is that AI is not reducing the value of vertical SaaS. It is increasing the strategic importance of companies that can apply AI within deeply embedded, mission-critical environments
For the full deck of highlights from the Q2SEG report, click here.
SEG Research – 2Q26 SaaS M&A and Public Market Report
To learn more about Software Equity Group, visit, softwareequity.com/research
Clare Christopher is the Editor of Sandhill.com