Technology Industry Report - Q3 2025

M&A Trends

Instead of broad-based deal flow, activity in Q3 concentrated in large-scale transactions across Application Software and IT Services, underscoring a more selective drive for digital growth.

Companies pushed to strengthen product ecosystems, embed AI, and continue cloud-driven innovation. This drove a large volume of Application Software transactions in Q3.

Market Dynamics

• Software & Technology EV/Revenue multiples saw steady growth in Q3, supported by robust market sentiment and strong earnings.
• Sales & Marketing delivered the sharpest quarterly lift in Q3 2025, returning a 35.2% increase in EV/Revenue multiple in one quarter, though annual gains still trailed the sustained strength seen in BI & Analytics.
• Development & Operations Management faced strong headwinds in Q3; EV/Revenue multiples slid by 21.2%, marking the segment’s lowest valuation level in the past year.
• As market disruptions remain more persistent, firms have begun channeling capital toward digital solutions that deliver resilience in the wake of uncertainty.¹
• However, Q3 2025 saw renewed momentum in the software IPO market, with improved investor sentiment driving stronger valuations and deal activity.²
• Generative AI has seen an increasingly consolidated market landscape as investment is concentrated among the top tech firms. This concentration has accelerated innovation at scale but reinforces structural barriers to entry and intensifying competitive pressure across the industry.³

Learn More

Reach out to Dinan Capital Advisors Managing Director Will Downing for more report insights.