Software Valuation and AI

Insights by Robert Fiske.

With all the recent furore about the price of oil and its knock-on effects, the impact of AI continues unabated.

Publicly listed software valuations have generally fallen substantially since the beginning of 2025 (eg. Salesforce down c.50%, Adobe c.40%). One might consider why that is the case. Is it a valid market correction and, if so, how does it affect smaller software businesses?

Investors appear to be concerned that AI will replace existing software models – though there is a recognition that Horizontal software (eg. general purpose tools, such as standalone Business Intelligence software) will be more vulnerable than Vertical software (industry specific platforms, often highly embedded in current workflows).

The valuation of smaller software businesses may be less affected by the changing sentiment as existing valuation metrics are typically lower and less volatile. However, the same logic applies to both large and small. Ensuring that your software is fully embedded in an organisation, creates its own datasets and, ideally, is mission critical, will all have an impact on the eventual exit that you can achieve.

To find out more about the sate of the tech M&A market, gain insight from an active tech business acquirer and learn how to make your own business more valuable, join our London seminar in June.

Valuation (and saleability) is also affected by the more mundane and prosaic (yet crucial) aspects, eg. share and IP ownership, clauses in customer contracts and property issues, so we are delighted that Geldards LLP have written a few words on this subject in the following guest article.

See Guest Article: Exit Readiness – Contractual Factors to Consider