Q4 | 2025 NAVIGATING DEALFLOW: EUROPEAN SOFTWARE QUARTERLY
After years of rising growth multiples, Europe’s software market is repricing. Our first Navigating Dealflow: European Software Quarterly brings a clear view of how this reset is changing M&A, where valuations are landing, and which segments are holding up.
This first edition explores three headline developments: the return to fundamentals in public software valuations, the growing role of private equity add-on activity in M&A in 2025, and the AI disruption that is transforming software business models and value creation.
Key Observations
- Multiples continued to normalise into 2025, and are increasingly driven by profitability and margin durability rather than revenue growth alone
- Approximately 60% of software businesses in Q4 2025 surpassed the Rule of 40, commanding valuation premiums of up to 35%
- PE add-on transactions played a stabilising role within sponsor activity throughout 2025
- Workflow Automation and Data Management & Analytics were among the most active M&A subsectors last year
- AI turbulence is hitting application software hardest, with horizontal and vertical SaaS seeing the steepest valuation compression
Explore the full report to see what’s driving multiples, where M&A activity is concentrating, and how AI is influencing value creation across European software.
Q4 | 2025
UNLOCK EUROPEAN SOFTWARE QUARTERLY INSIGHTS
In the inaugural Q4 2025 edition, we explore the valuation reset in public software, the recent trends in corporate and private M&A activity, and how AI is widening the gap between resilient software platforms and the rest.
