Software M&A Report:
BI & Analytics Outperformer –
AI integration drives growth

March 2026 – M&A trends, valuation multiples and transactions in the Software sector

Personal Note: Strategic momentum and AI driven growth in BI & Analytics: Software M&A market trends and implications

Besides the broader equity market downturn in recent weeks public software stocks have seen additionally sharp declines since Q3 2025. These are mainly driven by rising concerns over AI’s growing ability to replicate core software functionality and, over time, erode installed bases.
Investors are increasingly differentiating between (a) AI enablement and AI disruption risk, (b) technical complexity and defensibility and (c) profitability and cash generation. Multiple dispersion has become a defining market feature. As a result, the valuation gap across software sub-sectors has widened, reflecting differing expectations of AI’s impact on individual segments and business models. For example, MarTech software companies are trading at a discount due to a perceived higher replacement risk, while many BI and analytics companies are expected to benefit more from AI enablement and therefore trade at a premium.

Arne Tödt

Managing Partner ARTHOS
Expert in Digital Services & Software

arne.toedt@arthos.de

M&A deal value in Q4 2025 was characterized by five large-scale AI-driven acquisitions

Regarding overall M&A activity, we note fewer deals (591 / -13%) and higher deal value (€56bn / +2%) in Q4 2025. However, reported deal value has been skewed by five landmark transactions, all AI-related most notably IBM’s acquisition of Confluent ($11bn) and ServiceNow’s acquisition of Armis ($7.75bn). These transactions underscore that strategic M&A continues to represent the majority of M&A activity. In a broader global tech M&A perspective, corporates account for approximately $551bn in 2025 versus approximately $422bn* by financial buyers. Strategic investors are increasingly using M&A to acquire AI capabilities and domain-specific datasets faster than internal build cycles allow.

Graphic about: BI & Analytics Outperformer - AI integration drives growth — Quellenangabe

Capital IQ (as of 23 March, 2026)

AI-driven uncertainty widens performance gap – BI & Analytics sector remain best in class

Consequently, we are seeing AI become the central commercial due diligence topic in software M&A processes, shaping how prospective buyers evaluate targets. Key areas of focus include predictive analytics, workflow automation, agentic AI-driven customer engagement, and generative AI interfaces. Companies that have a robust, tested AI strategy in place will receive a valuation premium.

In our view, the software M&A market remains open. However, prospective buyers are clearly prioritising quality over quantity. M&A processes therefore require even more thorough preparation particularly in demonstrating AI enablement, defensibility, and profitability.