An analysis by Diego Gutiérrez ZarzaPartner at Baker Tilly Tech M&A
To help you understand the current market for buying and selling technology companies, we have summarised the key points of our latest research in this easy-to-use guide.
How are valuation multiples for AI companies evolving?
Until now, software has been valued using ARR (Annual Recurring Revenue) multiples. However, according to the analysis by our tech M&A expert Diego Gutiérrez Zarza, we are seeing a paradigm shift towards ‘Value through execution’.
Companies that demonstrate that their AI is not merely a support function, but an agent capable of completing workflows, are commanding premium valuations. By 2025, the M&A market had reached $4.7 billion, specifically rewarding those companies that control both data and processes.
What factors determine the success of a technology company’s sale today?
According to Baker Tilly’s proprietary framework for its Tech M&A division, exit valueexit valuedepends on three strategic assets:
- Data sovereignty: Does the company have exclusive access to the client’s data?
- Integration into the workflow: Is the product essential for day-to-day operations?
- Agentic capacity: Can the software move from ‘suggesting’ to ‘executing’?
Which tech sectors are driving the growth in valuation?
Our research highlights four key sectors :
- ERP: these have become centralised execution systems, handling over $100 billion in recent transactions.
- CRM: the focus has shifted towards data cleansing and standardisation (e.g. Salesforce’s acquisition of Informatica).
- Cybersecurity: buyers are shunning fragmentation and turning to comprehensive platforms such as Palo Alto Networks or CyberArk.
- Developer Tools: a sector experiencing explosive growth, where the key to valuation lies in proximity to the deployment pipeline.
When is the best time to start the exit planning process?
Once the company has validated its AI model as a genuine operational efficiency for the client. Given the strong resurgence in M&A activity (a 43% year-on-year increase), some companies are accelerating their Exit Planning process once they have validated their AI model as a technical innovation; however, this may cause the company to lose value during the sale process. Our advisors specialising in the valuation of technology companies help founders position their technology so that the multiples reflect their ability to control the system, not just to add yet another tool.
Expert advisors in technology M&A
If you’d like to find out more about how these changes affect your company, Diego Gutiérrez Zarza and the team at Baker Tilly Tech M&A offer strategic consultancy in:
- AI-based business valuationAnalysis of multiples based on data assets and performance.
- Sale of technology companies: Comprehensive management of the M&A process to maximise exit value.
- Exit Planning: Preparing the company to attract the interest of strategic buyers in 2026.
