Not All Exits Are Equal
State of the Exit Market
Acquirers are active. What they’re buying has changed.
SpaceX and Anthropic may be heading for IPOs, but for most venture-backed companies, M&A remains the exit pathway. The question is what that pathway looks like when the buyers have shifted their priorities.
Start with private equity. Technology accounted for roughly 30% of global PE deployment by value in 2025, but fell to just over 10% in Q1 2026 (PitchBook). Multiples have compressed significantly, with software EBITDA multiples falling from 30x in 2022 to 22x in 2025 and revenue multiples from 10-12x to roughly 4x (SEG/Aventis, PitchBook), but cheaper entry points haven’t drawn PE back in. The concern is not price. It is predictability. PE firms underwrite to a hold period and an exit multiple, and AI disruption makes both harder to model with confidence. That is why capital is flowing instead toward services, infrastructure, energy, and asset-heavy businesses where disruption risk is lower and likely to remain lower over a five to seven year hold.
Corporate acquirers are telling a different story, and they have the balance sheets to back it up. Corporate cash reserves hit a record US$3 trillion in late 2025 (S&P Global), and share prices have given buyers highly valued equity to use as acquisition currency. The result: Q1 2026 global M&A exceeded US$1.2 trillion (LSEG). Much of that activity is directed at technology. Approximately one-third of the 100 largest corporate M&A transactions in 2025 cited AI as part of the strategic rationale (PwC), and in Q1 2026, AI M&A deal volume was up 90% year-on-year (CB Insights). Buyers are acquiring tech to enhance growth and reduce cost, but the premium is not blanket. Acquirers are paying for capabilities that would take years to replicate internally: proprietary data, specialised AI talent, trained models, and distribution advantages in specific verticals. Pure wrappers on foundation models are struggling to attract serious interest.
The pattern is playing out globally, and Australia is no exception. TMT was the largest sector by inbound deal value in early 2026, accounting for US$2.2 billion of the US$5.1 billion in announced cross-border transactions in the first nine weeks of the year (Mergermarket). Close to two-thirds of the 40 largest announced deals in 2025 involved a foreign bidder (Herbert Smith Freehills). Foreign acquirers are looking beyond their home markets for defensible technology, deep vertical expertise, and AI capability that is embedded in the product rather than bolted on. For founders and boards in markets like Australia, that interest is real, but it is selective.
For those thinking about portfolio positioning or timing an exit, this market demands honest assessment. Companies with genuine AI integration, proprietary data, and workflow depth are attracting premium interest from corporate buyers. These are the companies to invest behind, accelerate AI capability in, and position for exit. Companies without those characteristics, particularly undifferentiated horizontal software, face a structurally softer market. PE appetite for software has clearly cooled, and the corporate buyers circling are looking past feature sets to underlying defensibility. For companies that have been disrupted or commoditised by AI, the conversation is harder: consolidation, acqui-hire, or managed wind-down. With 85% of VC exits occurring through M&A (PitchBook) and two-thirds of recent unicorn IPOs pricing below their last private valuation (EY), the M&A pathway is the realistic one, and it rewards those who have built something acquirers cannot replicate.
The exit market is open. It is not open equally.