The UK software sector is an attractive sector for M&A, driven by recurring revenues, scalability, innovation and adaptability.
The key trends for FY25 include:
- AI and data analytics: Software companies are leveraging AI for predictive analytics, enhancing decision-making, and mitigating risks
- Financial inclusion and literacy: Efforts to bridge the financial literacy gap and expand access to financial services are on the rise
- Sustainability and green: Companies are developing solutions that promote sustainability, such as green finance products and carbon footprint tracking
- Digital revolution: The adoption of cloud computing and increasing use of SaaS. The proliferation of IoT devices is expected to continue, leveraging data generated from these devices to make decisions. Hybrid cloud strategies are likely to be increasingly popular
The UK is also one of the strongest players in Europe, accounting for two-thirds of the total volume of deals in the first half of 2025.
EBITDA valuation multiples have decreased in H1 25 in the UK with similar trends globally, it’s not 100% clear what is driving this but it appears that AI is starting to disrupt existing SaaS models and this is impacting valuations for SaaS businesses. However quality assets with strong recurring revenue, defensible niches, and AI integration still attract premiums. Software businesses need to future proof their revenues.
Read more about the UK software market in our sector report.
PKF Smith Cooper Corporate Finance
By understanding our clients’ aspirations and business issues, we will work with them to deliver practical, commercially-viable advice with positivity and tenacity. Whether you are looking to buy, grow organically, sell, float or raise finance – we can help. Our partner-led advisory team specialises in comprehensive, high-intensity project-management of deals, ranging from £1m to £250m, but we specialise in deals valued between £5m and £50m. We are equally happy advising at a strategic level, or on discrete aspects of a transaction. To find out more about how we can help you and your business, please get in touch.
