Software Equity Group is an investment bank that puts out research on SaaS markets. They recently released their Q3 report. A summary is below but the full report may be found at https://softwareequity.com/research/.
M&A activity is down. “Aggregate software M&A volume totaled 963 announced transactions in 3Q26, down from 1,040 in 2Q26 and 1,275 in 3Q25 but still above 2022 and 2023 volume benchmarks.” We’d note a few things: 2022 and 2023 were terrible years for software so being above them isn’t that meaningful. Additionally not only were M&A volumes down in Q3 year over year, they also ticked down quarter to quarter in 2026 whereas in 2025 Q3 volume was higher than the prior quarter.
Press enter or click to view image in full sizeMultiples are consistent. “Private SaaS valuations softened in 3Q26 following the public market selloff earlier this year, with the median EV/TTM revenue multiple at 3.4x and the average at 5.4x. Premium outcomes continue, and buyers are still paying well for assets with strategic fit, defensible products, and AI relevance. Premium multiples went to assets that combine proprietary data, mission-critical workflows, and AI relevance.
Press enter or click to view image in full sizeStrategic acquisitions remain dominant. “Strategic buyers were involved in 90.8% of SaaS deals in 3Q26. This includes public and private strategics, as well as strategics backed by private equity or venture capital. As AI raises questions about which software products will hold their value, incumbents are under pressure to show customers and investors a credible AI roadmap, and buying proven products, data, and engineering teams is faster than building them. Most strategic deals remain tuck-ins that add a capability to an existing platform.”
Our view: Software has had a rough few years. The COVID hangover ended in 2022. Then SVB and Signature Bank collapsed, ChatGPT triggered the first real software scare, and the Fed hiked rates 500 basis points. Multiples got crushed. 2024 quieted down and the industry expected a strong 2025 and 2026. We did see some IPO activity from Figma, Netskope, ServiceTitan, and others. Then the SaaSpocalypse hit.
Now the narrative is fading. Multiples have rebounded nicely and Salesforce just announced the acquisition of Braze, which should catalyze more M&A. Absent a recession, we believe Q3 2026 M&A volumes represent a bottom. Software M&A should have a great 2027.
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