2026 Technology M&A Outlook

Industry report

Artificial intelligence is simultaneously creating acquisition opportunities and forcing buyers to reassess established software and technology-services models.

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Founders Group

Ali Naseer
Co-Founder & Partner
Ali@FoundersG.com (952) 797-4679
Matt Menzi
Co-Founder & Partner
Matt@FoundersG.com (301) 767-5616

EXECUTIVE SUMMARY

AI is expanding technology demand while changing buyer underwriting criteria

Technology deal activity is strong, but buyers are separating durable workflow ownership from products and services vulnerable to rapid automation.

AI creates growth opportunities and obsolescence risk
Buyers want proprietary data, agent-ready workflow and infrastructure while discounting easily replicated features.
Cybersecurity remains strategically important
Cloud, identity and managed security continue to draw large strategic and private transactions.
Vertical software remains relatively resilient
Deep workflow, embedded payments and high retention protect focused applications from broad platform competition.
Managed service provider consolidation is accelerating
Recurring contracts, local trust and cybersecurity capability support a deep lower-middle-market buyer set.
Service-delivery models are changing
Time-and-materials delivery faces pressure as automation shifts value toward outcomes, IP and managed services.
Growth quality is more important than growth alone
Retention, efficient acquisition, gross margin and cash conversion now matter more than headline recurring revenue.

SECTOR AT A GLANCE

Six categories comprise the investable lower- middle-market technology sector

Software and services require different valuation metrics, but the common question is whether the company owns a durable customer relationship.

Exhibit 1

Investable lane	Business model	Primary buyer lens	Key risk
Vertical software	Recurring applications for a defined industry	Workflow depth, retention and payments	AI disruption
Enterprise & infrastructure software	Horizontal tools and technical platforms	Mission criticality, data and ecosystem	Platform competition
Cybersecurity	Software, managed security and advisory	Threat relevance, data and recurring spend	Product obsolescence
Managed IT services	Contracted IT, cloud and support	Recurring revenue, retention and density	Labor / tool sprawl
Digital engineering & consulting	Projects, transformation and implementation	Specialization, IP and client depth	Utilization / AI
Data & tech-enabled services	Data, workflow and recurring operations	Proprietary data and outcome ownership	Service intensity

MARKET UPDATE

Capital is concentrating in AI infrastructure, cybersecurity and workflow-control assets

Technology leads aggregate transaction value, while legacy software and labor-based services face sharper questions about durability.

$649bn: Reported technology transaction value in the latest half-year
466: Reported MSP transactions in the latest full year
426: Reported cybersecurity acquisitions in the latest full year

Exhibit 2

Theme	Market interpretation	Owner evidence that matters
Agentic software	Applications are being redesigned for human and machine users.	Show workflow ownership and pricing power after automation.
Cloud security	Complexity and threat intensity keep security high on strategic agendas.	Demonstrate retention, efficacy and platform integration.
Legacy SaaS	Buyers are reassessing products whose feature set may be replicated by AI-native entrants.	Prove data, distribution and embedded workflow.
Managed services	SMB outsourcing remains durable as security and cloud complexity grow.	Track recurring contracts, churn and technician leverage.
Delivery automation	Consultancies can expand margin or lose billable work depending on the commercial model.	Quantify output, reuse, pricing and outcome-based revenue.

PRIVATE DEAL ACTIVITY

Private transaction activity is concentrated in software carve-outs and recurring IT services

Sponsors are using compressed valuations to buy durable applications while consolidators continue purchasing MSP and cybersecurity density.

Recurring: Primary requirement across software and managed services
Vertical: Industry depth remains a durable consolidation thesis
Add-ons: Dominant structure in fragmented technology services

Exhibit 3

Activity category	Buyer activity	Implications for owners
Vertical software	Sponsors are acquiring category leaders and adding adjacent modules or geographies.	Retention and workflow depth can outweigh slower growth.
Cybersecurity	Strategics are buying cloud, identity and platform capabilities at scale.	Small specialists need a clear product or customer adjacency.
Managed IT	Platforms are buying local MSPs, MSSPs and vertical specialists.	Standardized tools and recurring contracts drive integration value.
Digital engineering	Buyers seek data, cloud and AI implementation capability.	Outcome ownership and reusable IP reduce labor-model risk.
Carve-outs	Corporate portfolio changes are creating focused software and services platforms.	Standalone readiness and customer continuity are central.

BUYER LANDSCAPE

Strategic buyers and financial sponsors apply different valuation frameworks

Buyer valuation depends on product adjacency, distribution, standalone cash flow, customer density and integration requirements.

Exhibit 4

Buyer type	Typical objective	What can create differentiated value	Common constraint
Global technology strategics	Add product, data or ecosystem control	Distribution, bundling and platform integration	Antitrust and product overlap
Software-focused sponsors	Acquire durable recurring revenue	Operational playbooks and add-on capital	Growth durability and leverage
Sponsor-backed software groups	Add modules, verticals or geography	Immediate cross-sell and shared infrastructure	Product integration
MSP / MSSP consolidators	Add contracts, technicians and local density	Shared tools, procurement and security stack	Churn and integration
IT-services strategics	Add scarce talent and customer access	Utilization, delivery leverage and account expansion	Labor dependence

VALUATION FRAMEWORK

Retention, growth efficiency and workflow ownership determine value

Software is commonly valued on recurring revenue; services on adjusted EBITDA. Both require a credible case that AI strengthens rather than erodes the model.

3-7x: Common recurring-revenue tuck-in band for software
5-11x: Common recurring-revenue platform band for software
5-13x: Common EBITDA range across technology services

Exhibit 5

Valuation lens	Why it matters	What strengthens the case
Retention	Gross and net retention reveal product necessity and expansion.	Use cohort data that reconciles to recurring revenue.
Growth efficiency	Buyers balance growth with acquisition cost and burn.	Show sales efficiency, payback and free cash flow.
Workflow ownership	Embedded systems are harder to replace or reproduce.	Map integrations, data and user dependency.
AI durability	Automation can improve or commoditize the offering.	Demonstrate product roadmap and realized customer value.
Services quality	Recurring contracts and outcome-based delivery reduce labor risk.	Track recurring mix, utilization, gross margin and automation.

VALUATION FRAMEWORK | FOUNDERS GROUP INDICATIVE RANGES

Software and technology services require different valuation metrics and common durability tests

Ranges are Founders Group guideposts for commercial lower-middle-market companies—not quoted prices or a substitute for company-specific analysis.

Exhibit 6

Exhibit 7

Lens	What changes the outcome
Premium drivers	High retention; efficient growth; embedded workflow; proprietary data; mission criticality; recurring contracts; differentiated security or AI; strong margins; low concentration.
Discount drivers	Feature risk; churn; services-heavy ARR; customer concentration; weak gross retention; negative cash flow; project dependence; obsolete stack; founder-led sales; poor security.
Structure matters	Rollover, earnouts, retention payments, deferred revenue, working capital, debt-like customer obligations and product liabilities can change proceeds at the same headline multiple.

SELECTED ANNOUNCED TRANSACTIONS | SCALED PLATFORMS

Large transactions are establishing strategic positions in cloud, data and cybersecurity

Selected transactions illustrate strategic direction; they are not an exhaustive market sample.

Exhibit 8

Target / transaction	Buyer / ownership	Lane	Reported value	Strategic rationale
Wiz	Google	Cloud security	$32.0bn	Adds a major multi-cloud security platform
CyberArk	Palo Alto Networks	Identity security	$25.0bn	Builds identity into a broader security platform
Informatica	Salesforce	Data management	$8.0bn	Adds enterprise data integration for AI workflows
Altruist	Vanguard	Wealth technology	$4.6bn	Adds advisor custody and software infrastructure
Perficient	EQT	Digital consulting	$3.0bn	Takes a scaled digital-engineering platform private
Moveworks	ServiceNow	AI workflow	$2.85bn	Adds conversational AI for employee workflows
Jamf	Francisco Partners	Device management	$2.2bn	Takes a recurring security and management platform private

SELECTED ANNOUNCED TRANSACTIONS | ADD-ONS AND CAPABILITIES

Add-on acquisitions are expanding vertical expertise, customer relationships and cybersecurity capability

Managed-services transactions rarely disclose price, but the repeated acquisition logic is visible.

Exhibit 9

Target	Acquirer	Lane	Strategic rationale	Reported value
Kinzit Technologies	Net at Work	MSP / cybersecurity	Adds managed-services and security capability	Not disclosed
Layer27	Katalyst	MSP / cybersecurity	Adds cloud, digital operations and security	Not disclosed
First Focus	Integris	Managed IT	Extends an SMB-focused platform internationally	Not disclosed
Four regional MSPs	The 20 MSP	Managed IT	Adds local contracts and national density	Not disclosed
Sundance Networks	The 20 MSP	Managed IT	Continues a repeatable tuck-in program	Not disclosed
PCH Technologies	Evergreen / Lyra	MSP / MSSP	Adds a security-first regional provider	Not disclosed
Abacus Group + Medicus IT	FFL-backed combination	Vertical MSP	Combines financial-services and healthcare specialization	Not disclosed

SUBSECTOR 1 OF 6

Vertical software

Deep workflow, industry data and embedded payments can protect focused software from broader platform and AI competition.

3.0-6.0x ARR: Indicative tuck-in valuation
5.0-9.0x ARR: Indicative platform valuation
Recurring workflow revenue: Core economic model

Exhibit 10

Lens	Assessment
Buyer universe	Roper Technologies; Constellation Software; Tyler Technologies; Hg, Vista, Thoma Bravo and specialist software platforms.
What buyers underwrite	Gross and net retention; market share; workflow depth; payments; churn by cohort; implementation; sales efficiency; product roadmap; customer concentration.
Current market developments	Buyers continue to favor vertical systems that own a mission-critical workflow and can add modules, payments or data products.
Principal risks	AI-native entrants; small market ceiling; services-heavy implementation; weak net retention; founder-led sales; poor product investment.

Selected market signal

Vertical software remains a durable sponsor and strategic thesis where the application is embedded in industry-specific operations.

SUBSECTOR 2 OF 6

Enterprise and infrastructure software

Mission-critical data, development and infrastructure tools retain value, while feature-level products face rapid platform absorption.

3.0-6.5x ARR: Indicative tuck-in valuation
6.0-10.0x ARR: Indicative platform valuation
Recurring platform usage: Core economic model

Exhibit 11

Lens	Assessment
Buyer universe	Microsoft; Salesforce; ServiceNow; Oracle; IBM; Broadcom; Atlassian; software-focused sponsors and platform groups.
What buyers underwrite	Retention; usage; integrations; developer or admin dependency; ecosystem; cloud cost; gross margin; product velocity; efficient growth.
Current market developments	Strategics are buying data and AI workflow capability, while sponsors seek mature recurring assets at reset valuations.
Principal risks	Bundling by hyperscalers; open-source alternatives; AI feature replication; cloud-cost pressure; security; slower seat growth.

Selected market signal

Recent data-management and AI-workflow acquisitions show the value of owning an enterprise control point rather than a standalone feature.

SUBSECTOR 3 OF 6

Cybersecurity software and services

Threat intensity and platform consolidation support demand, but product relevance can change quickly as categories converge.

4.0-7.0x ARR: Indicative tuck-in valuation
7.0-11.0x ARR: Indicative platform valuation
Recurring protection + data: Core economic model

Exhibit 12

Lens	Assessment
Buyer universe	Palo Alto Networks; Google; Cisco; CrowdStrike; Fortinet; Microsoft; Thoma Bravo; security platforms and MSSPs.
What buyers underwrite	Retention; threat efficacy; telemetry; cloud coverage; partner channel; recurring mix; platform integration; gross margin; breach and privacy history.
Current market developments	Large acquirers are consolidating cloud and identity security into broader platforms, while services buyers add managed detection and compliance.
Principal risks	Category convergence; platform bundling; false positives; customer concentration; incident liability; talent scarcity; rapid product obsolescence.

Selected market signal

Two of the largest current technology transactions center on cloud and identity security, underscoring strategic demand for control points.

SUBSECTOR 4 OF 6

Managed IT and managed security services

Recurring contracts, SMB complexity and local trust support a deep consolidation market when service delivery is standardized.

5.0-8.0x EBITDA: Indicative tuck-in valuation
8.0-12.0x EBITDA: Indicative platform valuation
Contracts + service desk: Core economic model

Exhibit 13

Lens	Assessment
Buyer universe	Evergreen / Lyra; The 20; Integris; Thrive; Ntiva; New Charter; Magna5; Net at Work; regional MSP and MSSP platforms.
What buyers underwrite	Recurring contract mix; gross margin; churn; ticket metrics; technician utilization; tool stack; security capability; customer concentration; sales pipeline.
Current market developments	Consolidators continue buying regional MSPs, vertical specialists and MSSPs while investing in shared security, procurement and service delivery.
Principal risks	Month-to-month revenue; owner-led relationships; tool sprawl; technician turnover; cyber liability; weak documentation; customer churn after close.

Selected market signal

Repeat buyers with dozens of completed acquisitions demonstrate that the lower-middle-market MSP lane remains highly investable.

SUBSECTOR 5 OF 6

Digital engineering and technology consulting

Cloud, data and AI capability remain valuable, but buyers increasingly discount undifferentiated billable-hour models.

5.0-8.0x EBITDA: Indicative tuck-in valuation
8.0-12.0x EBITDA: Indicative platform valuation
Talent + reusable delivery: Core economic model

Exhibit 14

Lens	Assessment
Buyer universe	Accenture; IBM; Cognizant; Capgemini; NTT DATA; Globant; Perficient; sponsor-backed digital consultancies.
What buyers underwrite	Organic growth; utilization; realization; backlog; client concentration; partner ecosystem; offshore mix; attrition; reusable IP; managed-services conversion.
Current market developments	Clients are redirecting budgets toward data modernization and AI implementation, while automation pressures traditional development and support work.
Principal risks	Bench growth; time-and-materials pricing; key-client concentration; talent attrition; project overruns; AI-related rate compression.

Selected market signal

Scaled digital-consulting take-privates show sponsor appetite where the platform has durable clients and differentiated transformation capability.

SUBSECTOR 6 OF 6

Data and technology-enabled services

Proprietary data and ownership of a recurring business outcome can support premium EBITDA valuations beyond conventional outsourcing.

5.5-8.5x EBITDA: Indicative tuck-in valuation
9.0-13.0x EBITDA: Indicative platform valuation
Data + recurring outcomes: Core economic model

Exhibit 15

Lens	Assessment
Buyer universe	Information-services companies; vertical software groups; analytics platforms; private-equity-backed workflow and outsourcing businesses.
What buyers underwrite	Data rights; recurring revenue; gross margin; customer ROI; automation; retention; workflow integration; regulatory exposure; service labor content.
Current market developments	AI raises the value of proprietary, permissioned data while reducing the labor needed for some technology-enabled workflows.
Principal risks	Data provenance; privacy; low-margin services hidden as software; customer concentration; model commoditization; platform dependency.

Selected market signal

Buyers are paying for control of differentiated data and workflow, not simply for attaching automation to a conventional service process.

CONSOLIDATOR LANDSCAPE

Relevant consolidators include global platforms and serial lower-middle-market acquirers

Representative consolidators and ownership reflect the 2H26 market; the list is not exhaustive.

Exhibit 16

Lane	Representative sponsor-backed / private	Representative strategic / public	Typical acquisition logic
Vertical software	Hg, Vista and specialist sponsor-backed platforms	Roper; Constellation; Tyler; industry strategics	Workflow, modules, payments and geography
Enterprise software	Thoma Bravo; Francisco; Clearlake; private platforms	Microsoft; Salesforce; ServiceNow; Oracle; IBM; Atlassian	Data, AI workflow and ecosystem control
Cybersecurity	Sponsor-backed security platforms and MSSPs	Google; Palo Alto; Cisco; CrowdStrike; Fortinet; Microsoft	Cloud, identity, telemetry and platform breadth
Managed IT	Evergreen / Lyra; The 20; Integris; Thrive; Ntiva; New Charter	Net at Work; telecom and IT-services groups	Contracts, technicians and local density
Digital engineering	Sponsor-backed digital consultancies	Accenture; IBM; Cognizant; Capgemini; NTT DATA; Globant	Talent, clients and transformation capability
Data-enabled services	Private workflow, information and outsourcing platforms	Information-services and vertical software groups	Data rights, automation and recurring outcomes

OWNER PREPARATION AND MARKET OUTLOOK

Demonstrate value durability under changing technology conditions

The diligence burden is shifting from whether a company uses AI to whether its customer relationship and economics survive widespread AI adoption.

Exhibit 17

	Preparation priority	Required evidence
1	Reconcile recurring revenue	Build customer and cohort schedules for ARR, retention, expansion, contraction and churn.
2	Separate software from services	Distinguish license, subscription, implementation, managed services and project gross margin.
3	Quantify growth efficiency	Show acquisition cost, payback, sales productivity, burn, free cash flow and the investment required for growth.
4	Build the AI durability case	Explain which tasks automate, which workflow remains controlled and how pricing and margin change.
5	Prepare security diligence	Organize architecture, access controls, incidents, privacy, penetration testing and vendor dependencies.
6	Reduce founder dependence	Institutionalize product, sales, customer success and service-delivery leadership before a process begins.

Founders Group outlook

Cloud security, identity and AI workflow should remain strategic acquisition priorities. Vertical software will retain relative resilience where retention and workflow depth are strong. MSP and MSSP consolidation should continue as SMB technology and security complexity increases. Labor-based services will face greater valuation dispersion based on automation, IP and recurring revenue.

ABOUT THIS REPORT

Use this report as market context, not as a valuation opinion

A 2H26 view of private deal activity, consolidators, valuation context and owner priorities across Technology & Technological Services.

Methodology

Market observations reflect current transaction patterns, disclosed consideration and operating developments across software and technology services. Software ranges use recurring revenue where labeled; services ranges use adjusted EBITDA. Founders Group indicative ranges triangulate private-market behavior, disclosed precedents and subsector judgment; they should not be read as a fairness opinion or valuation conclusion.

1: Market observations Current transaction patterns and operating themes.
2: Disclosed transactions Values are shown only when transaction consideration was public.
3: Indicative ranges Founders Group judgment based on size, quality and buyer behavior.

Exhibit 18

Term	Meaning in this report
Tuck-in	A smaller acquisition integrated into an existing platform. Strategic fit, geography, capability and customer density may influence value.
Platform	A business capable of standing alone as a buyer's sector anchor, with management, systems and a repeatable growth model.
Enterprise value / EBITDA	A valuation ratio comparing enterprise value with adjusted earnings before interest, taxes, depreciation and amortization.
Indicative range	A market guidepost rather than a quoted price. Actual outcomes depend on company-specific facts, structure and process.

Disclaimer

This material is for general informational purposes only and does not constitute investment, legal, tax, accounting or valuation advice, an offer to sell, or a solicitation to buy any security. Information is believed reliable but has not been independently verified and may be incomplete. Actual transaction outcomes depend on company-specific facts, market conditions, structure and process. Past transactions and market observations are not indicative of future results.

Founders Group

Ali Naseer
Co-Founder & Partner
Ali@FoundersG.com (952) 797-4679
Matt Menzi
Co-Founder & Partner
Matt@FoundersG.com (301) 767-5616

San Francisco · Denver · Minneapolis · New Yorkwww.foundersg.com

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Technology & Technological Services