Our friends at Software Equity Group have pulled together their Annual SaaS Report, and as always, their tone is positive, their outlook is assertive and we appreciate all the insights they have to offer.
Here are five highlights from their report:
1.Aggregate software M&A activity reached a historic peak in 2025
with 4,629 transactions announced, representing 26.4% YoY growth and surpassing the prior 2022 peak by roughly 1,000 deals. This surge reflects not only improving buyer confidence and more stable financing conditions, but also structural shifts reshaping the software market. Lower barriers to software creation and rapid AI adoption have expanded both company formation and acquisition activity, broadening the M&A universe and sustaining elevated annual deal volumes.
2. SaaS M&A activity also reached its highest level on record in 2025
With 2,698 deals, supported by strong and consistent quarterly volume throughout the year. SaaS transactions accounted for approximately 58% of total software M&A, consistent with recent years and near alltime highs. While SaaS’s share of total activity has remained stable, absolute deal volume continues to rise as overall software and AI-related M&A expands.
3. A+ SaaS businesses continued to command outlier valuations in 2025
Mission-critical platforms, high retention, strong ARR growth, and Rule of 40 or higher, with several notable transactions completed at double-digit revenue multiples. These included ServiceNow’s acquisitions of Veza Technologies (40.0x) and Armis (22.8x), Palo Alto Networks’ acquisitions of CyberArk (22.0x) and Chronosphere (20.9x), and Veeam Software’s acquisition of Securiti AI (23.0x). Together, these deals reflect intense competition among well-capitalized buyers for scarce, strategically critical assets.
4. SaaS M&A valuations expanded for the second consecutive year
With the average EV/TTM revenue multiple rising to 6.9x while median multiples remained tightly clustered around ~4.0x. This widening gap highlights an increasingly barbell-shaped market, with deal activity concentrated at both premium, double-digit multiples and lower single-digit outcomes. Valuation expansion has been driven by easing interest rates, strong operating performance, and heightened competition from investors deploying significant dry powder vying for scarce assets.
5. Buyers pursuing strategic angles accounted for approximately 92% of all deals
Regardless of buyer-backing, buyers pursuing strategic angles accounted for approximately 92% of all deals underscoring that strategic rationale is driving M&A activity. Additionally, private equity & venture capital remained highly active, participating in roughly 58% of SaaS M&A deals through direct investments & portfolio add-ons.
Many high-quality public SaaS companies have become acquisition targets as public valuations lag improving fundamentals. This dynamic fueled a sharp rise in take-private activity, including multiple large transactions led by Thoma Bravo, TPG, and Centerbridge, alongside strategic acquisitions by Adobe and IBM.
Importantly, this remains a bullish signal, reflecting strong conviction that public SaaS assets are trading below intrinsic value
To download the full SEG report, click here.