Software M&A Report:
Cybersecurity – Rising Threats Drive Growth

Q3 2025 – M&A trends, valuation multiples and transactions in the Software sector

Personal Note: Strategic momentum and resilient growth in cybersecurity: M&A trends and market outlook for 2025

Following economic uncertainty in 2023 and early 2024, which constrained IT budgets and slowed deal flow, the software sector entered 2025 facing renewed volatility. Persistently elevated interest rates and geopolitical and trade tensions weighed on valuations across several software verticals. Yet cybersecurity has stood out as a resilient outperformer: stabilizing IT spending, rising regulatory pressure, and escalating AI-driven threats have kept budgets intact and deal activity robust. By Q3 2025, the sector is riding strong momentum, highlighted by Google’s $32B acquisition of Wiz and public leaders such as CrowdStrike and Zscaler, whose share prices have significantly outpaced the broader software index.

Arne Tödt

Managing Partner ARTHOS
Expert in Digital Services & Software

arne.toedt@arthos.de

M&A deal activity slows down slightly in Q2 2025 following early rebound in 2024

Cybersecurity continues to demonstrate resilient momentum in 2025, fueled by persistent threat escalation, regulatory pressure, and the growing complexity of digital ecosystems. AI has become the defining theme, both empowering defenders and amplifying attacker capabilities, pushing enterprises to rethink security from a prevention-first, identity-centric standpoint. Even though the economy is challenging, M&A activity in the cybersecurity sector is still strong. This is shown by ongoing consolidation among major players, for example, Google announced in March that it would buy cloud security firm Wiz for $32B.

The threat environment remains intense with global cybercrime losses expected to exceed over $10T by the end of 2025. Cyberattacks are becoming more commercialized as cybercriminals sell ready made attack tools, stolen data, and access credentials on the dark web. Many attacks are automated or powered by AI, and the number of network scanning and probing activities has reached record highs. Smaller and mid-sized businesses are particularly at risk, as they often lack the resources and security expertise of larger corporations.

Grafik über: Die M&A-Aktivitäten verlangsamen sich im zweiten Quartal 2025 leicht, nachdem sie sich 2024 zunächst erholt hatten

Source: Capital IQ (as of September 30, 2025)

BI & Analytics and Cybersecurity outperform: AI, cloud, and cyber threats drive growth

Looking ahead, cybersecurity will remain one of the strongest growth areas in the software sector. According to Gartner, global cybersecurity spending is expected to rise about 15% in 2025, from roughly $184B to $212B. Meanwhile, overall IT spending is forecast to grow by 9.8% in 2025, reaching about $5.6T. Companies are increasingly seeking to work with fewer but more comprehensive security providers. At the same time, the constant evolution of AI-driven threats ensures that cybersecurity budgets will stay a top priority, even as other areas of IT investment come under pressure.