Software Equity Group is an investment bank that puts out research on SaaS markets. They recently released their Q1 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 remained active, with 636 transactions in the quarter, up 19% QOQ and 31% YOY, the strongest quarter since 1Q22. Financial sponsors continue to lead the market, particularly in vertical SaaS and add-on acquisitions.”
Multiples up slightly from 2024. “M&A valuations held steady, with the median EV/TTM revenue multiple at 4.1x, flat QOQ, and up slightly from 3.9x in 1Q24. The average multiple of 6.0x reflects continued appetite for premium assets, though buyers remain disciplined. Top-tier companies with strong retention, vertical focus, and profitable growth continue to command a clear pricing premium.”
Private equity volume is the majority. “Deals funded by both private equity and venture capitalists accounted for 58% of SaaS transactions. Meanwhile, publicly traded strategics represented 22% of deal volume and will continue to be selective amidst the current macro environment.”
Verticals. “Vertical deals comprised 49% of SaaS M&A volume in 1Q25, up slightly from 48% in 1Q24. Buyers remain drawn to purpose-built platforms with embedded workflows and defensible market positions.”
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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