A market rebalanced: valuations, resilience and reality
The tech and tech services sector has undergone a valuation reset. At surface level, median and average multiples may look similar to previous years, but beneath that lies a widening gulf between the top performers and everyone else. The valuation variance has grown—those with strong fundamentals and scalability continue to attract high prices, while others either fall short or fail to transact altogether.
There’s still capital out there, but the focus has shifted to resilience and returns. Buyers are prioritising mission-critical businesses, those that are cash-generative and can demonstrate strong unit economics. Land-grab growth strategies are being replaced by more disciplined models, where profitability and scalability now take centre stage.
A market rebalanced: valuations, resilience and reality
The tech and tech services sector has undergone a valuation reset. At surface level, median and average multiples may look similar to previous years, but beneath that lies a widening gulf between the top performers and everyone else. The valuation variance has grown—those with strong fundamentals and scalability continue to attract high prices, while others either fall short or fail to transact altogether.
There’s still capital out there, but the focus has shifted to resilience and returns. Buyers are prioritising mission-critical businesses, those that are cash-generative and can demonstrate strong unit economics. Land-grab growth strategies are being replaced by more disciplined models, where profitability and scalability now take centre stage.
“The average multiple might look the same—but the gap between the best and the rest is bigger than ever.”
WESLEY FELL-SMITH, PARTNER AND HEAD OF TECH & TECH SERVICES
AI: boardroom buzz vs operational reality
Artificial intelligence is dominating headlines and board agendas, but industrialised use cases remain uneven. Before you do anything with AI, you’ve got to get it in order. Organisations that are already using data intelligently are best placed to layer on AI to enhance decision-making or drive automation—but many are still figuring out the foundations.
AI’s potential is clear, but meaningful adoption will only accelerate once data governance, structure, and strategy are in place. And while proclamations about agents killing software dominate industry speak, the next few years will be about sorting facts from buzzwords, and thus defining the long-run winners.
Sub-sector focus and digital evolution
The sector is continuing to evolve quickly, with digitisation influencing every level of the market. Our tech team operates across clearly defined subsectors—recognising, for instance, that software businesses differ fundamentally from technology services. A core strength of ours, however, lies in cross-pollinating insights between sub-sectors — such as applying a SaaS perspective to tech services when positioning businesses in the market or learning from how software businesses integrate data into workflows — a capability that has become a key success factor for data and information services companies.
Data-driven decision-making, embedded workflow tools, and SaaS-style operating models are becoming more prevalent, even in legacy subsectors. Digitisation is everywhere, and there isn’t a business that isn’t adopting it at some meaningful level.
Cloud adoption accelerated during COVID, but the real challenge now is what comes next. Businesses are asking, “I’m in the cloud—what do I do with it?” The answers lie in integration and data—particularly when it comes to preparing for AI adoption.
AI: boardroom buzz vs operational reality
Artificial intelligence is dominating headlines and board agendas, but industrialised use cases remain uneven. Before you do anything with AI, you’ve got to get it in order. Organisations that are already using data intelligently are best placed to layer on AI to enhance decision-making or drive automation—but many are still figuring out the foundations.
AI’s potential is clear, but meaningful adoption will only accelerate once data governance, structure, and strategy are in place. And while proclamations about agents killing software dominate industry speak, the next few years will be about sorting facts from buzzwords, and thus defining the long-run winners.
“AI will disrupt eventually, but for now, it’s an enabler—if you’ve got your data in shape.”
WESLEY FELL-SMITH, PARTNER AND HEAD OF TECH & TECH SERVICES
Sector performance and buyer behaviour
Buyers are still active in high-quality assets: put simply, those showing solid growth, strong earnings quality, and sufficient scale. However, longer procurement cycles, cautious deployment, and elevated cost of capital have reshaped how buyers approach value.
Private equity remains central to the tech market, but with a stronger focus on cash returns, strategic sector theses, and early pipeline planning. Gone are the days of reactive bidding. The best buyers are now working 12–18 months ahead—building conviction, warming up their ICs, and making sure they’re ready when the right asset comes to market. And indeed our advice to clients follows this pattern.
Cybersecurity: when—not if
Cyber remains a core consideration, though the nature of the discussion is shifting. In the mid-market, pure-play cyber products are still rare—many are either scaled or remain early-stage or sit within VC portfolios—but security is now baked into every business’s operating model.
While significant investment continues to flow into cyber prevention, we see growing momentum behind cyber resilience, in other words, there’s increasing maturity in the mindset: assume a breach will happen—then what? The real test is how fast you can detect, contain, recover, and get back online. From penetration testing to disaster recovery planning, there’s growing demand for tooling that supports response and restoration—rather than relying solely on prevention.
Sector performance and buyer behaviour
Buyers are still active in high-quality assets: put simply, those showing solid growth, strong earnings quality, and sufficient scale. However, longer procurement cycles, cautious deployment, and elevated cost of capital have reshaped how buyers approach value.
Private equity remains central to the tech market, but with a stronger focus on cash returns, strategic sector theses, and early pipeline planning. Gone are the days of reactive bidding. The best buyers are now working 12–18 months ahead—building conviction, warming up their ICs, and making sure they’re ready when the right asset comes to market. And indeed our advice to clients follows this pattern.
We completed 39 tech transactions with a total value of €3.5bn in FY24/25
Team performance
Our international tech team had a stellar year, advising on 39 M&A transactions with a total value of €3.5bn. Activity spanned the full spectrum of the sector, from digital transformation and B2B software to IT services and marketplaces. Every country in our network completed tech deals—demonstrating both the breadth of our expertise and the strength of our collaborative, cross-border platform.
Selected highlights included the sale of PHC Software in Portugal to European cloud leader Cegid, a process that drew interest from some of the most prominent software players and investors across Europe and the US. We also advised on the sale of Solar Media to Informa and supported Mailmetrics, SpotonMedics, and Edilex Lakieto in finding strategic growth partners. These transactions reinforce our ability to deliver outcomes across high-growth, high-specialisation segments.
Discover the full PHC Software success story
Cross-border collaboration was a particular strength this year. In one standout example, our UK and Swedish teams joined forces to advise Inflexion on its investment in Mecenat—a leading Nordic loyalty platform—on its investment from UK-based private equity firm Inflexion. This approach reflects our belief that the future of tech M&A is increasingly vertical, requiring deep sector specialism and seamless international execution.
With over 20 years of experience, we’ve been helping great businesses achieve more by providing expert, tailored advice to unlock opportunities and create lasting success.
Tech & Tech Services Lead
Wesley Fell-Smith
Partner
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Transactions
Not just numbers on a balance sheet, our transactions represent over 20 years’ commitment to our clients’ future. Helping them change the game. Even before it was ready to be changed.
Investment to strengthen a position in SMB Software across Iberian and Portuguese-speaking African markets
Adviser to PHC Software on its sale to Cegid
Leading digital omnichannel marketplace in Sweden and Finland secures investment
Adviser to Inflexion on its investment in Mecenat Group AB
Succession solution for a flagship company in the German IT industry
Adviser to Imker on the acquisition of a majority stake in AVM and the arrangement of related acquisition financing
Microsoft cloud specialist secures debt to acquire data and AI expert
Adviser to Transparity Solutions on raising debt facilities from NatWest to support the acquisition of DataShapa
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