The SaaS market has set a new record for M&A deals, heading towards 800,000 million
The SaaS market closed 2025 with 2,698 M&A transactions, an all-time high and 28 per cent more than in 2024, whilst the first quarter of 2026 maintained this pace with over 620 deals. Our expert advisers in technology M&A have produced a report on this market, featuring data up to June 2026, covering M&A activity, funding rounds and the trends that are redefining the software-as-a-service economy. Private equity now accounts for around 57% of transactions in the sector, and the average stock market valuation has fallen sharply from the highs of 2021.
What does the SaaS market encompass?
The SaaS market encompasses software businesses delivered via the cloud on a subscription basis, and is structured into three distinct layers. The first is horizontal B2B SaaS, which covers cross-functional areas such as CRM, ERP, human resources, finance and marketing. The second is vertical B2B SaaS, comprising sector-specific platforms designed for the hospitality, healthcare, construction and insurance sectors. The third tier comprises B2C and prosumer subscriptions, aimed directly at end consumers or independent professionals.
What unites the three layers is the business model: recurring revenue and multi-client delivery in the cloud, as opposed to other technology business models. For this reason, the report explicitly excludes pure IT consultancies and services, bespoke software development, legacy on-premises licences, hardware-focused businesses, and e-commerce marketplaces or pureplays, pure-plays whose economics are measured by transaction volume rather than recurring revenue. This distinction is key for any founder wondering whether their company fits within the valuations and multiples currently associated with ‘SaaS’, as confusing categories distorts market comparisons.
The six trends that are redefining SaaS in 2026
AI re-pricing and migration of the posting model
The shift in value from per-user licensing towards usage, agents and outcomes will define the 2025–2026 biennium. Gartner forecasts that by 2030, at least 40 per cent of enterprise SaaS spending will have migrated to usage, agent or outcome-based models, with the share of revenue based on per-user licensing falling from 21 per cent to 15 per cent. Salesforce Agentforce has already surpassed $800 million in ARR, with year-on-year growth of 169 per cent.
Margin squeeze due to inference costs
The gross margin of over 80 per cent that defined a generation of cloud businesses is falling to between 52 and 65 per cent for artificial intelligence-intensive products. According to ICONIQ, the average gross margin for an AI product is set to stand at around 52 per cent in 2026, with inference accounting for around 23 per cent of revenue during the scaling phase. This figure is crucial for any valuation process, as it fundamentally alters the traditional understanding of SaaS profitability.
The ‘SaaSpocalypse’ and the stock market downgrade
Valuations for listed SaaS companies have plummeted: the median EV/Revenue ratio fell to 3.4x in 2026 from a peak of over 15x in 2021. In February 2026, around $285,000 million in SaaS market capitalisation evaporated in 48 hours following the launch of Claude Cowork – a market verdict on the credibility of AI-powered substitutes at scale.
Vertical SaaS with embedded fintech
Integrated finance is transforming the revenue mix of leading vertical platforms. Toast already generates around 80 per cent of its revenue from financial services, and adding fintech to its vertical SaaS offering increases revenue per customer by between two and five times, compared with an estimated market opportunity of 185,000 million dollars, of which less than 20 per cent has been captured so far.
Supplier consolidation and platform bundling
Chief technology officers are actively reducing the number of suppliers: 68 per cent plan to consolidate their technology landscape, with a target reduction of around 20 per cent. The era of ‘re-bundling’ favours large suites (Microsoft, Salesforce, SAP, ServiceNow) over stand-alone solutions, putting pressure on niche suppliers to seek an exit via M&A.
Global regulatory digitalisation
Regulations on electronic invoicing and digital reporting (ViDA in the EU, CFDI/NF-e in Latin America, GST in India, FATOORA in Saudi Arabia) are driving the adoption of compliance SaaS solutions regardless of the macroeconomic cycle, acting as a counter-cyclical floor for demand that protects this segment even during periods of economic slowdown.
M&A and funding in the SaaS sector: the figures for 2025–2026
Tech M&A activity rebounded strongly in 2025: the value of deals rose by more than 76 per cent to $478,000 million, and nearly half of the value of major strategic deals cited artificial intelligence as the main reason. Within this sector, the SaaS sub-segment recorded 2,698 transactions in 2025 – an all-time high and 28 per cent more than in 2024 – whilst the first quarter of 2026 maintained this pace with over 620 deals.
El Private equity has established itself as the dominant buyer, accounting for around 57 per cent of SaaS deals in the first quarter of 2026, with add-ons add-ons of its volume. dry powder Accumulated dry powder is at near-record levels, which is driving capital deployment towards take-privates take-privates and roll-ups. Major delisting deals have dominated the high end of the market: Dayforce (US$12.3 billion, Thoma Bravo), OneStream (US$6.4 billion, Hg) and Smartsheet (US$8.4 billion, Vista Equity Partners/Blackstone).
Two distinct investment approaches coexist in parallel. On the one hand, the acquisition of capabilities at premium multiples, such as Salesforce’s acquisition of Informatica for $8 billion or Google’s acquisition of Wiz for $32 billion, justified by the installed base they seek to defend. On the other hand, there is the consolidation of fragmented vertical SaaS markets, where ‘compounders’ such as Roper or Constellation Software turn sectoral fragmentation into sustainable cash flow. Europe, which is structurally less consolidated than the United States, is emerging as a priority focus for buy-and-build strategies in the coming years.
SaaS market growth forecast up to 2030
The medium- and long-term consensus puts the global SaaS market on track to reach $800,000 million; $1.5 trillion by the early to mid-2030s, with such a wide range driven by the very definition of the market used in each study. The most defensible approach for an investment thesis involves modelling a base CAGR of 13–15 per cent for the core market, with upside potential linked to the revaluation of AI and downside risk associated with the compression of revenue per seat.
In the base-case scenario, starting from approximately $400,000 million in 2025, a CAGR of 13–15 per cent leads to around $800,000 million in 2030, in line with Grand View Research’s projection of $819,000 million. In the bullish scenario, with a CAGR of 18–20 per cent, the market would cross the $1 trillion mark before 2030 if AI players drive new net spending and outcome pricing outcome pricing expands the TAM. By region, Asia-Pacific is set to be the fastest-growing region, with a CAGR of around 14.3%, and India is on track to reach $50,000 million in ARR by 2030, quadrupling its current base. By type, vertical SaaS is growing at around 31 per cent compared with 28 per cent for horizontal SaaS, with valuation premiums of 25–30 per cent for assets with an NRR above 115 per cent and embedded fintech.
What does this mean if you’re considering selling your SaaS company?
The report’s data points to a market undergoing a complete redefinition: less appetite for generalist multiples and a higher premium for vertical assets with solid recurring revenue, embedded fintech and customer retention above 115% NRR. Before going to market, it is worth understanding which layer of the SaaS market your company fits into, how your gross margin is performing against the new AI benchmark, and which buyer (private equity, strategic buyer or sector-specific compounder) best matches your profile.
At Baker Tilly Tech M&A Advisors, we help founders and management teams of SaaS companies prepare for the sale process and understand the true value of their company in the current market context.
Market Research
Market Research on the Global SaaS Market
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Frequently asked questions about the Software as a Service (SaaS) sector in Spain
SaaS refers to cloud-based software businesses with a subscription model and recurring revenue, whether they are horizontal (CRM, ERP, HR), vertical (sector-specific platforms) or B2C subscription-based. This excludes IT consultancies, bespoke development, on-premises licences, hardware businesses and e-commerce marketplaces, whose business model relies on transaction volume rather than recurring revenue.
The median EV/Revenue ratio for listed SaaS companies fell to 3.4x in 2026 from a peak of over 15x in 2021, in what the market has dubbed the ‘SaaSpocalypse’. The most recent trigger was the loss of some $285,000 million in market capitalisation within 48 hours following the launch of Claude Cowork in February 2026, which the market interpreted as a sign of the credibility of AI-based alternatives.
Private equity is the dominant buyer, accounting for around 57 per cent of SaaS deals in the first quarter of 2026, with add-ons representing around 72 per cent of the total volume. Alongside private equity are strategic buyers who pay premium multiples for specific capabilities – such as Google in its $32,000 million acquisition of Wiz – and compounders specialising in consolidating fragmented vertical SaaS markets.
The gross margin of over 80 per cent typical of traditional SaaS is set to fall to between 52 and 65 per cent for AI-intensive products, according to ICONIQ data for 2026. Inference consumes around 23 per cent of revenue during the scaling phase, which necessitates a review of valuation models that assumed structurally high margins to be a defining feature of the SaaS model.
The consensus is for a global market worth between 800,000 million and 1.5 trillion dollars by the early to mid-2030s, with a base CAGR of 13–15 per cent. Vertical SaaS is growing faster than horizontal SaaS (31 per cent versus 28 per cent), and Asia-Pacific is the region with the highest growth forecast, with India on track to reach $50,000 million in ARR by 2030.
