2025 SaaS M&A Market Insights and Founder Takeaways - The SaaS CFO Recap

Podcast: The SaaS CFO

Published: 2025-12-30

Duration: 56 minutes

Guests: Jim Williams

Summary

The software M&A market in 2025 remained stable with predictable deal volumes and valuations. Founders looking to sell should focus on fundamentals like retention, growth, and profitability to attract buyers.

What Happened

Jim Williams, Managing Director at GLC Advisors, joins Ben Murray to delve into the state of the software M&A market in 2025, describing it as 'steady but not spectacular.' The year saw predictable deal volumes and valuations similar to 2024, with private software M&A valuations ranging from four to five times revenue multiples. This stability is attributed to a scarcity of A-grade assets and a steady demand for quality businesses.

Jim highlights the importance of clean financials and clear revenue models, noting that buyers are particularly interested in the predictability and repeatability of subscription and usage-based revenue. He emphasizes that contract terms, such as multi-year versus month-to-month agreements, can significantly influence buyer perception and valuation.

Despite the buzz around AI, traditional SaaS businesses continue to attract strong interest and capital. AI is causing some valuation anomalies, but it has not yet significantly influenced mid-market M&A processes. Jim forecasts that AI-first companies, which are currently in early stages, will become more prominent in the future.

The episode also covers the narrowing bid-ask spread between buyers and sellers, with a sensible middle ground being found for good assets. Jim mentions that earnouts in deals have become more reasonable, often based on achievable metrics rather than unachievable figures. He advises founders to prepare meticulously for due diligence, as longer timelines often signal issues or lack of preparation.

Jim points out that businesses with an enterprise value between $200 million and $1 billion are highly sought after, attracting significant interest from bidders. He also discusses the trend towards platform versus add-on acquisitions, with add-ons being more common due to lower risk and fewer high-quality platform opportunities.

Looking ahead to 2026, Jim predicts increased deal volume and more platform trades in the sponsor community. He encourages founders to focus on fundamentals like retention, growth, and profitability to position their businesses for successful outcomes.

Key Insights