The global software sector saw a surge in merger and acquisition (M&A) activity in the first half of 2026, with deal volume reaching roughly 2,672 transactions, marking the second-highest count ever recorded. However, the total announced deal value annualizes to about $240 billion, heavily skewed by a single transaction: SpaceX's $60 billion acquisition of Cursor. Excluding this deal, the annualized deal value falls to approximately $120 billion, one of the lowest totals in recent years, according to Kroll's Summer 2026 Global Software Sector Update.
Kroll's report highlights that while the number of software M&A transactions is near record levels, the total deal value is concentrated in a few large deals. Cursor alone accounted for about 64% of all software deal value in the second quarter of 2026. Public company valuation multiples have ticked up for the first time in a while, and private M&A EBITDA multiples increased by 25%. Despite these gains, valuations vary significantly across software categories, even among those with similar growth and margin profiles, indicating that buyers are pricing factors beyond traditional financial metrics.
The data reflects a complex market where growth is increasingly prioritized over profitability, with margins above 25% offering limited additional valuation benefits. The report suggests that the traditional Rule of 40 metric, which balances growth and profitability, is becoming less relevant as buyers focus more on growth potential and category leadership. The dominance of AI-related deals, such as Cursor's acquisition by SpaceX, underscores the sector's shifting dynamics and investor appetite for AI-driven software companies.
Kroll's update covers software M&A and public company comparables through June 30, 2026, providing detailed insights into deal activity and valuation trends in the sector. The next comprehensive update is expected after the close of the third quarter, which will reveal whether the current momentum in deal volume and valuation multiples sustains through the rest of the year.