Software Equity Group is an investment bank that puts out research on SaaS markets. They recently released their Q2 report. A summary is below but the full report may be found at https://softwareequity.com/research/.
M&A activity is strong. “SaaS M&A continued its record-setting pace in Q2 with 637 transactions, the highest quarterly total SEG has tracked. That brought 1H25 volume to 1,273 deals, up 30% from 1H24.”
Multiples up slightly from 2024. “M&A valuations remained stable in Q2, with the median EV/TTM revenue multiple holding at 4.2x for a second consecutive quarter, and the average rising slightly to 6.1x, its highest mark since 1Q23.”
Private equity volume is the majority. “Private equity and venture-backed buyers drove 57% of SaaS M&A in Q2. Pure strategic buyers comprised the remaining 43%.”
Verticals. “Vertical SaaS represented 46% of all SaaS M&A activity in Q2, up from 40% a year ago, as buyers leaned into sector-specific solutions with embedded workflows and high switching costs.”
Our view: This is the steady state market for software, reminiscent of a pre-covid environment. The great multiples we saw in late 2021 and early 2022 are gone, but the current market is more akin to what we saw in 2018/2019. We’d call it healthy. Big thanks to SEG for putting the data together. Please reach out to them to learn more about their investment banking practice.
Thank you for your readership. Visit us at blossomstreetventures.com for more SaaS data and blogs. Email the author at sammy@blossomstreetventures.com
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