Meritech’s Look at 2025 Exits: M&A at $587B Hits a Decade+ High … But IPOs Were a Whimper

Key Takeaways

• Only six pure‑play software IPOs in 2025.
• M&A volume hit $587 B, decade high.
• Top private deals: Wiz $32 B, Scale AI $14.3 B.
• Public software valuations remain below 10× revenue.
• Figma alone trades above 10× EV/ARR.

Pulse Analysis

The 2025 software IPO market proved an outlier, delivering just six pure‑play listings compared with the 27 seen in 2021. High‑growth private giants such as SpaceX, OpenAI, Anthropic, Stripe and Databricks opted for private capital, signaling a preference for control and flexibility over public‑market scrutiny. This scarcity of supply forced investors to recalibrate expectations, with median IPO valuations offering modest returns and, in many cases, underperforming the last private round.

Conversely, merger‑and‑acquisition activity exploded, reaching $587 billion— a decade‑high driven by a perceived regulatory shift and abundant cash reserves among strategic buyers. Flagship deals like Wiz’s $32 billion acquisition, Scale AI’s $14.3 billion transaction, and Armis’s $7.75 billion sale underscore the appetite for scaling AI and cybersecurity assets. These mega‑deals not only reshaped market concentration but also set new pricing benchmarks that will influence deal structuring in the coming years.

Valuation dynamics further complicate the landscape. While 85 % of public software firms trade below 10× next‑twelve‑month revenue, acquirers remain selective, targeting only those with compelling growth trajectories. Figma stands out as the sole company above a 10× EV/ARR multiple, highlighting the premium placed on high‑growth, cash‑generating businesses. Looking forward, a potential SpaceX IPO—potentially the largest ever—could reset expectations for both public and private exits, making 2026 a pivotal year for tech capital allocation.