The ‘death of SaaS’ could be the best thing to ever happen to SaaS M&A

The ‘death of SaaS’ could be the best thing to ever happen to SaaS M&A

By Allie Garfinkle
Senior Finance Reporter and author of Term Sheet
March 31, 2026, 8:14 AM ET

Shantanu Narayen, who recently resigned as CEO of Adobe Systems, now finds himself with ample time to enjoy golfing.

Despite the prevailing narratives surrounding a supposed decline in the software-as-a-service (SaaS) industry, current mergers and acquisitions (M&A) data paints a different picture of vitality within the sector.

In the final quarter of 2025, enterprise SaaS M&A reached a remarkable total value of $83.7 billion, according to recent PitchBook data. This figure was generated from 245 deals, reflecting a modest decrease in deal volume compared to the previous quarter. However, there was a substantial increase of nearly 24% in deal value. Overall, 2025 marked the highest level of enterprise SaaS M&A activity since the peak observed in 2021.

This outcome may come as a surprise, particularly in the wake of February’s so-called SaaSpocalypse. Within 24 hours of the announcement of Anthropic’s Claude Cowork AI, software stocks in the public markets experienced a significant downturn, erasing $285 billion in market value in a matter of hours. Although some of the hardest-hit companies, such as Salesforce, Adobe, and Workday, have since stabilized or rebounded, they still remain down year-to-date.

The SaaSpocalypse can be seen as an immediate and instinctive response to the evolving role of AI within the technological landscape. However, the latest PitchBook data serves as a reminder that while the narrative of the “death of SaaS” might be detrimental to public market valuations, it does not inhibit private market deal activity.

“The SaaSpocalypse is accelerating M&A rather than slowing it down,” stated Derek Hernandez, PitchBook senior research analyst, in an email. “The sharp decline in public software multiples has rendered take-privates significantly cheaper for private equity sponsors, who are already deploying record levels of capital. Additionally, M&A involving private equity-backed enterprise SaaS surged over 100% year-over-year in 2025, totaling $89 billion. We are witnessing a flight to defensibility in the market.”

Nevertheless, the advantages within the SaaS sector are quite concentrated. The Q4 M&A figures are significantly bolstered by 17 multi-billion mega-deals, which accounted for over 75% of the total deal value in that quarter. Key transactions included IBM’s acquisition of Confluent for $11 billion and the joint acquisition of Clearwater Analytics by Permira and Warburg Pincus for $8.4 billion. Notably, strategic corporate M&A activity surged dynamically in Q4, exhibiting a quarter-over-quarter growth of 168.5%, reaching $51.8 billion.

It would not be an exaggeration to suggest that we may be entering a pivotal and prosperous phase for SaaS transactions. The current distress in public markets could temporarily lower asset prices while the urgency surrounding AI persists.

On record, I do acknowledge that the notion of the “death of SaaS” has some truth. However, it does not specifically pertain to the likes of Salesforce or Workday, both of which are likely to remain operational at the end of the decade. What is indeed fading is the traditional SaaS business model predicated on annual recurring revenue and seat licenses. As this model evolves, we can expect to see a continuous flow of deals.

See you tomorrow,

Allie Garfinkle
X: @agarfinks
Email: [email protected]
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