Today we have a new PDF report called “2024 Wrapped: Software M&A Edition” from our friends at Alantra, an investment bank for mid-market growth companies.

Here are some highlights from the report, showing the strengthening of the software M&A sector…

• The average Q4 2024 software M&A deal has been at 5.0x annual revenues (across 379 transactions)

• Average SaaS M&A revenue multiples increased 19% during 2024 (from 4.2x in Q1 to 5.0x in Q4 2024).

• Average public company SaaS revenue multiples are up 24% from Q4 2022 to Q4 2024 (from 6.6x to 8.2x)

• Software M&A Deal volume in Q4 2024 is up 34% versus the same period last year (379 vs. 281 transactions)

The good news is that we’re seeing more software M&A deals get done and at higher valuation multiples than a year ago. We’re expecting a robust 2025 for software M&A activity.

Below are some additional highlights from the full report, which is available via DocSend.

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2024 Wrapped: Software M&A Edition

Here are some highlights from the full report which can be downloaded here. Thanks to our friends at Alantra for producing it for our community.

Software M&A Outlook for 2025

Here’s Alantra’s M&A outlook for 2024 from the report...

We expect software M&A activity and valuations to continue to improve in 2025, driven by a combination of tailwinds that are advantageous to software business owners considering a transaction.

• Improving Macro Environment: Recent economic data confirms the US economy remains on solid footing. Upward revisions to income growth and historically robust productivity growth remain the key pillars to the US economic outperformance. Stabilized markets would provide a stronger foundation for planning and executing transactions, correlating with higher CEO confidence and a positive economic outlook.

• Public Markets at All-Time-Highs: Public software company valuations act as a leading indicator to private M&A transaction values. The Nasdaq hitting All-Time-Highs in 2024 bodes well for M&A valuations in 2025.

• Growing Pile of Dry Powder from Investors: dry powder (or unused cash reserves in the M&A market) has accumulated at an accelerated rate in 2024, even as the outlook on deal-making was greatly optimistic at the start of the year.

• Interest Rate Cuts: Fed rate cuts can be a strong tailwind for sponsors and for the M&A market more broadly – not only by lowering PE’s cost of capital and making it easier to underwrite investments, but also in building transactors’ confidence around the macro flightpath and target valuations.

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