Just like in our economy, there are two distinct worlds in the software economy that operate very differently:
- The few but visible VC-backed software and AI companies with big bubble bets.
- The hidden majority of steady AI-enabled SaaS growers that make up 80% of software companies worldwide — who didn’t take big VC funding.
The big VC game this year is all about AI-first with crazy growth and huge rounds.
They are all trying to find the next 10 or 20 companies that could be worth $10 billion or more.
But the exit game for most software companies is still dominated by buyers who want proven revenues, sticky customers, efficient growth, and at least a little profitability.
AI helps with all of those valuation drivers, but AI isn’t the whole game for PE (private equity) buyers, strategics owned by PE, and many strategic acquirers in late 2025.
90% of all software company exits are still for under $100M, including both VC-backed and boostrapped companies.
Gaurav Bhasin is the founder and managing director of Allied Advisers, an M&A advisory firm whose principals have completed over 100 sell-side transactions for software and tech founders.
Allied Advisers typically works with founders selling their businesses for $20M–$200M, helping them prepare materials, run a competitive process, and negotiate terms.
In this week’s interview, we discuss how today’s M&A market looks very different from the 2021 bubble.
Valuations have normalized, deal timelines have increased, and buyers are more disciplined. But the demand for profitable, steadily growing SaaS companies is stronger than ever.
For practical founders considering an exit in the next few years, this episode offers clear expectations and tactical guidance. As Gaurav explains:
“The good news for SaaS founders is that the private equity community has raised about $1.5 trillion of capital, and more is being raised. And they also have the debt. So there’s $7 trillion of dry powder to do deals. Private equity is not paid to sit on the cash. And they love recurring revenue software.
“Private equity investors will typically move much faster than strategic buyers. Strategics will take a while. You need a business unit sponsor to buy into the vision, then they will push the corporate to do the deal. But with the private equity, they will look at your financial metrics and if you fit in, they can move pretty fast.
“The one caveat with private equity compared to strategic is they generally pay a little bit less than the strategics because strategics have the GTM for higher growth, so private equity will index more on the financials.”
Check out this practical interview with Gaurav Bhasin on the Practical Founders Podcast.
