SaaS M&A Hits Record Volume in 2025: 28% Growth and What Drives It

SaaS M&A deal volume grew 28% in 2025, the highest annual activity on record, according to Software Equity Group's 2026 SaaS Report, which draws on data from 2,700 SaaS mergers and acquisitions. The growth is not uniform. AI is reshaping which SaaS businesses attract premium multiples and which are being repriced downward. Understanding the split is critical for any SaaS owner or buyer operating in this market.

Deal Volume Growth 2025

28%

SaaS M&A Transactions

2,700

Highest Annual Volume Ever

Record

The headline growth figure masks a bifurcation that is the most important dynamic in SaaS M&A right now. AI-enabled SaaS businesses, defined as those with AI features embedded in core workflows, proprietary training data, or AI-driven automation that reduces customer headcount, are commanding multiples significantly above the market average. Non-AI SaaS businesses, particularly those in mature categories with limited differentiation, are being repriced downward as buyers apply a discount for AI transition risk.

PwC's analysis of AI's impact on software valuations identifies three categories of SaaS business in the current market. The first is AI-native: built from the ground up with AI as the core product. These command the highest multiples, often 8x to 12x ARR for high-growth businesses. The second is AI-augmented: traditional SaaS with AI features added to existing workflows. These trade at a moderate premium to the market, typically 4x to 7x ARR. The third is AI-exposed: traditional SaaS in categories where AI-native competitors are emerging. These face multiple compression and are being acquired at distressed or below-market valuations by buyers who want the customer base but not the legacy product.

The Software Equity Group data, combined with transaction intelligence from Acquiry's own deal flow, points to a consistent set of buyer priorities in the current SaaS M&A market:

The median ARR multiple for SaaS acquisitions in 2025 was approximately 4.2x, according to Software Equity Group. However, this median obscures a wide distribution. The top quartile of transactions, defined by growth rate, NRR, and AI positioning, traded at 6x to 12x ARR. The bottom quartile traded at 1.5x to 3x ARR, reflecting the AI transition discount applied to businesses in exposed categories.

The growth rate premium remains the single most powerful driver of SaaS valuation. Businesses growing ARR at 30% or more annually command a significant premium over those growing at 10% to 15%. The rule of 40 (revenue growth rate plus EBITDA margin) remains a key screening metric for PE buyers, with businesses above 50 on the rule of 40 attracting the most competitive processes.

Within the SaaS universe, vertical SaaS businesses, those built for a specific industry with deep workflow integration, are commanding the highest multiples and attracting the most competitive buyer processes. The logic is straightforward: vertical SaaS businesses have higher switching costs, deeper customer relationships, and more defensible data moats than horizontal SaaS competitors.

The most active vertical SaaS categories in 2025 M&A were healthcare technology, legal technology, construction and field service management, financial services compliance, and supply chain management. Each of these categories shares a common characteristic: the SaaS product is embedded in a mission-critical workflow that customers cannot easily replace, and the data generated by the product has standalone value for AI training and automation.

One of the more significant trends in the 2025 SaaS M&A market is the rise of acqui-hires: acquisitions where the primary value being acquired is the engineering team and their AI expertise, rather than the product or revenue. Large technology companies, unable to hire AI engineers fast enough through normal recruitment, are acquiring early-stage SaaS businesses primarily to bring the team in-house.

These transactions typically value the business at a significant premium to its financial metrics, but the premium is paid for talent rather than revenue. For founders of early-stage SaaS businesses with strong AI engineering teams, this creates an exit pathway that did not exist three years ago. The downside is that the product is typically wound down post-acquisition, which is not the right outcome for every founder.

For SaaS business owners considering an exit in 2026, several actions will maximise value and deal certainty:

Quantify your AI story

Buyers will ask about AI. If you have AI features, quantify their impact: what percentage of customers use them, what is the retention differential between AI users and non-AI users, and what data does your product generate that has AI training value? If you do not have AI features, have a clear answer for why your category is not AI-exposed or what your AI roadmap looks like.

Clean up your revenue metrics

ARR, NRR, churn, and customer concentration are the first four numbers any serious buyer will examine. Ensure these are calculated consistently, documented clearly, and can be reconciled to your financial statements. Inconsistencies in revenue metrics are the single most common cause of deal delays and price reductions.

Build your data room before you need it

The best SaaS exits in 2025 were characterised by sellers who arrived at a process with a complete data room: financial statements, customer contracts, employee agreements, IP assignments, and technical architecture documentation. Buyers who receive a complete data room move faster and are less likely to use diligence findings as a basis for price renegotiation.

Understand your buyer universe

SaaS businesses in 2026 have three primary buyer types: strategic acquirers who want the product and customer base, PE firms who want the recurring revenue and EBITDA potential, and AI-driven acquirers who want the data and team. Each buyer type values different things and structures deals differently. Knowing which buyer type is most likely to pay the highest price for your specific business is the starting point for any exit process.

For buyers

• AI positioning is now a primary valuation input, not a secondary consideration. Buyers should assess whether a target is AI-native, AI-augmented, or AI-exposed before applying a multiple.
• Vertical SaaS businesses in mission-critical categories such as healthcare technology, legal technology, and financial services compliance are attracting the most competitive processes and should be prioritised early in any sourcing strategy.
• Businesses above 50 on the rule of 40 and growing ARR at 30% or more annually are attracting the most competitive processes, so buyers should expect to move quickly and price accordingly.

For sellers

• Quantify the business impact of any AI features before going to market. Buyers will ask what percentage of customers use them, what the retention differential is, and what data the product generates for AI training.
• Prepare a complete data room before launching a process. Sellers who arrive with financial statements, customer contracts, employee agreements, IP assignments, and technical architecture documentation in order reduce the risk of price renegotiation during diligence.
• Identify which of the three buyer types, strategic, PE, or AI-driven, is most likely to pay the highest price for the specific business, as each values different attributes and structures deals differently.

Acquiry runs buy-side and sell-side mandates for digital businesses. We are not limited to the sectors or markets covered here: any sector, any market, bring it to us anyway. Start a mandate (opens in a new tab).