Quarterly Tech M&A Update | Q1 2025

M&A market developments and valuation environment in the first quarter

M&A activity in the tech sector experienced a slight decline in Q1 2025, following a particularly strong performance in Q4 2024.

The European tech market remained resilient in Q1 2025, recording 605 M&A transactions. While slightly down from the previous quarter, this marks a 6% increase compared to Q1 2024 and reflects the stable momentum observed in recent years. The year-on-year growth underscores sustained investor interest and suggests that this underlying momentum may continue in the coming months.

Strategic investors continued to drive deal activity, accounting for 93% of all transactions in Q1 2025. Their ongoing dominance signals strong confidence and long-term commitment to the sector. Cross-border deals also remained steady, comprising 53% of total activity – consistent with the trend seen in previous years.

Transaction volumes declined in both the IT Services and Application Software segments, with IT Services falling from 267 to 221 deals and Application Software from 353 to 310. Meanwhile, the Semiconductor and Systems Software sectors remained stable, showing only minor fluctuations. Overall, the data points to a normalization in deal activity following an exceptionally strong end to 2024.

In our M&A update, we analyze the current valuation environment in the tech sector, focusing on the following key developments: