M&A Market Dynamics – Software & Technology
- After a meaningful drop last quarter, the broader technology sector total deal value in Q1 2025 saw a 75% uptick compared to Q4 2024, with $125B in transaction value compared to $71B in the prior quarter. The growth was consistent across software and other technology segments, increasing 163% and 30%, respectively.
- Total software deal volume increased 18% in Q1 2025 compared to the previous quarter, with 815 transactions, a 39% improvement from the same quarter one year ago. This indicates that the markets have stabilized after the series of interest rate hikes and the tight financing environment faced throughout 2024.
- The significant increase in spending during Q1 2025 was partly driven by strategic buyers, with notable transactions advancing innovation in AI solutions and signaling growing interest in deal activity. Additionally, private equity investing was softer than anticipated, as investors remained hesitant due to continued macroeconomic volatility. However, according to a survey from PitchBook, 75% of respondents expect economic conditions to improve over the course of 2025, reflecting their longer-term investment horizon of three to eight years.
