M&A Market Dynamics – Software & Technology
- Q4 2024 saw a meaningful drop in software and technology total deal value, falling over 50% to $71B compared to $145B in the prior quarter. The decline was consistent across software and other technology segments, declining 53% and 49%, respectively.
- Despite the significant drop in deal value, software transaction volume was actually up in Q4 2024 compared to the previous quarter, increasing by 1%. This juxtaposition, paired with a noticeable decline in transactions greater than $250M, indicates an uptick in deal volume for smaller companies.
- Many within the technology M&A community anticipate a significant rebound in deal activity in 2025. According to a survey from 451 Research, 80% of respondents expect an increase in tech M&A spending in 2025, while 58% predict an increase in valuations. Though respondents were optimistic heading into 2024, the year ultimately fell short of predictions, with tech M&A spending falling ~20% short of the previous decade’s average spending. The optimism for 2025 is primarily due to an anticipated reduction in interest rates, the new U.S. presidential administration, and an expectation that strategic acquirers will be more competitive than in 2024.
