By Thomas Tisone, Vice President | Published 28 January 2026 | Q4 2025 Edition
Software valuations fell again in the final quarter of 2025 as investors priced in the risk that AI could disrupt large parts of the software stack. This edition of the Silverpeak LLP Software Benchmark report sets out software valuation benchmarks for listed companies in the US and Europe: EV/Revenue and EV/EBITDA multiples, growth forecasts and margins, using median values from S&P Capital IQ as at 31 December 2025. It is written for founders, investors and corporate development teams who need a current read on how software is being priced.
Quarterly findings: where software multiples fell
The US took the heaviest falls. US SaaS EV/Revenue multiples dropped 12% in the quarter to 5.40x, the steepest quarterly decline of any category, and US vertical software is down 37% on the year to 5.34x. These segments went into 2025 on the most stretched multiples and are the most exposed to the view that AI lowers the cost of building a competing product. US vertical also fell 21% on EV/EBITDA in the quarter, despite being the only category to grow EBITDA margins over the year.
European software held up better, from a lower base. The European median EV/Revenue multiple slipped 7% in the quarter to 2.79x, only 3% below a year earlier. The UK and DACH were broadly flat, up 3% and 1% in the quarter. The Nordics were the exception: down 19% on EV/Revenue and 21% on EV/EBITDA, leaving the region at its lowest EBITDA multiple in the period the report covers.
| Category | EV/Revenue | QoQ | YoY |
|---|---|---|---|
| US SaaS | 5.40x | −12% | −16% |
| US Vertical | 5.34x | −7% | −37% |
| US Horizontal | 4.20x | −3% | −14% |
| Europe | 2.79x | −7% | −3% |
Valuations still track the Rule of 40, but investors are paying for earnings over growth. Companies scoring above 40 traded at a median 6.2x revenue, against 3.0x for those below 20. At similar Rule of 40 scores, companies with higher margins and lower growth traded at 5.6x, compared with 3.9x for faster-growing, less profitable peers.
How AI is affecting software valuations and deal activity
Lower prices are bringing buyers in. Thomas Tisone, Vice President at Silverpeak, said: “Depressed valuations are inviting increased levels of M&A activity with consolidation and opportunistic acquisitions on the rise.” Private equity take-private interest is building in enterprise software, and the report cites Thoma Bravo’s $12.3bn all-cash take-private of HCM platform Dayforce. Security went the other way, the only sector to post a quarterly gain on EV/EBITDA (up 3%), supported by heightened cybersecurity concerns. For sellers, defensibility and earnings quality now count for more than headline growth.
More from Silverpeak
Our Q4 2025 software M&A report, momentum builds in software M&A as deal values and volumes rebound, shows the other side of the same market. For the quarter before, read US valuations cool as market sentiment shifts to caution, the Q3 2025 benchmark. For the quarter after, read software under pressure as investors search for durability amid AI disruption. Silverpeak is a boutique investment bank specialising in M&A and financing for technology growth companies. Read more about our work in software and our track record in software transactions.
The full report adds regional and sector breakdowns, quartile analysis, the growth and margin matrix, and methodology. Download it below.