Tech company valuation plays an increasingly critical role in global M&A. Investors and acquirers are drawn to technology businesses for their scalability, recurring revenue potential, and ability to reshape entire industries. Yet valuing these companies is complex. Business models range from capital-light SaaS platforms to asset-heavy hardware manufacturers, each carrying unique risks and growth profiles. Understanding how these businesses are valued is essential for founders considering an exit and investors seeking fair pricing in a competitive market.

Valuation multiples remain the most common benchmarking tool. They provide quick insight into how markets price companies relative to financial performance. However, these multiples vary widely across technology segments and shift with macroeconomic conditions, investor sentiment, and capital availability. This report focuses on Tech company valuation multiples, explaining how different segments, software, IT services, hardware, and AI, are valued and what drives the gap between top-performing and average businesses.

The technology M&A landscape has changed significantly in the past decade. Valuations now reflect shifts in business models, capital availability, and investor sentiment. Tech company valuation multiples have historically favored software businesses, but recent data shows that market conditions and macroeconomic changes are reshaping expectations across segments.

Our review of over 3,200 transactions from 2015 to early 2025 shows clear patterns. Software companies command a premium with a median revenue multiple of 3.0x and a median EBITDA multiple of 15.2x. IT services and hardware companies trade at lower levels, averaging 1.3–1.4x revenue and 10–11x EBITDA

Bar charts compare IT services, hardware, and software valuations. Software has higher median EV/Revenue (3.0x) and EV/EBITDA (15.2x) multiples than IT services and hardware, shown with blue bars on both charts.

These results also show the pandemic-era valuation spike in 2021, where software multiples briefly peaked at 6.0x revenue, followed by a steady normalization. They are now hovering near 2.0x revenue and 17.6x EBITDA for software companies.

This report examines these valuation trends in detail, explaining what drives the differences between sectors, how revenue multiples and EBITDA multiples are applied, and why understanding a company’s business model is critical when valuing tech companies.

Tech companies key segments:

  1. IT services and consulting
  2. Hardware
  3. Software (SaaS, on-premise, components)
  4. Artificial Intelligence (AI)

IT services and consulting

Market Characteristics

The IT services sector encompasses consulting, system integration, managed services, and support solutions. These businesses are typically built on contract-based or time-and-materials models with relatively low capital requirements and minimal intellectual property development compared to software firms. As a result, IT services companies are often generally cash flow positive early in their lifecycle and show lower volatility in financial performance compared to product-driven technology businesses.

Valuation Multiples for IT Services

Historical M&A data covering more than 600 disclosed transactions between 2015 and H1 2025 shows that IT services companies have been valued at a median revenue multiple of 1.3x and a median EBITDA multiple of 10.2x. This stability reflects the mature nature of these businesses and the predictability of their positive operating cash flow.

A table titled Tech company valuation multiples for IT Services shows EV/Revenue, EV/EBITDA, and EV/EBIT multiples, with sample sizes, quartiles, and median values, sourced from Mergermarket.

The EBITDA multiple is the preferred metric for valuing IT services companies because it captures operational profitability without distortions from capital structure or tax differences. Unlike many early-stage software or AI firms that rely heavily on revenue-based metrics, IT services firms typically have positive EBITDA margins and predictable earnings.

What Drives Premiums?

Although the average multiples for IT services are lower than for software companies, certain players command higher valuation multiples:

  • Recurring revenue models (e.g., managed services and outsourced IT support)
  • Expertise in high-demand areas such as cybersecurity, cloud migration, and data analytics
  • Diversified customer base with low concentration risk
  • Strong management teams and scalable delivery models

As highlighted in Aventis Advisors’ dedicated analysis on IT services valuation multiples, businesses with these attributes often attract strategic buyers and private equity investors willing to pay a premium.

M&A Outlook for IT Services

Our IT Services M&A Insights show deal activity has stayed steady. This held true even during economic uncertainty. IT support and digital transformation remain core spending priorities for businesses worldwide. Demand for cybersecurity, managed services, and automation is growing. We expect this segment to keep attracting active buyer interest. Valuation multiples are likely to remain stable.

Explore further

Our IT Services Advisory page

Hardware

Market Characteristics

Hardware companies design, manufacture, and distribute physical technology products, ranging from semiconductors and peripherals to consumer electronics and specialized devices. Unlike software companies or IT services firms, hardware businesses are capital-intensive, often requiring significant investments in manufacturing capacity, inventory, and distribution networks.

This difference in business model directly affects valuation. Many IT services and software businesses are cash flow positive early. Hardware companies often face greater earnings volatility due to product cycles, commoditization risk, and dependence on global supply chains. Profitability can be strong during peak product cycles, but it often compresses as competition increases or demand slows.

Valuation Multiples for Hardware Companies

We analyzed more than 400 disclosed M&A transactions from 2015 to H1 2025. Hardware companies were valued at a median revenue multiple of 1.4x and a median EBITDA multiple of 11.0x. These levels are slightly higher than IT services on an EBITDA basis. They are significantly lower than software companies, which average 3.0x revenue and 15.2x EBITDA.

A table titled Hardware valuation multiples highlights tech company valuation multiples, showing EV/Revenue and EV/EBITDA with sample sizes, quartiles, and medians. Median EV/Revenue is 1.4x; median EV/EBITDA is 11.0x. Source: Megermarket.

EBITDA multiples are the primary metric for hardware valuations. Earnings give a more accurate picture of operational health than revenue alone. Revenue multiples are applied more cautiously, given that sales can fluctuate sharply depending on product launches and market demand.

Key Valuation Considerations for Hardware

  • Capital intensity: Significant CAPEX and working capital needs can reduce free cash flow, impacting how buyers view valuation
  • Product cycles: Dependence on new product releases introduces revenue volatility, which investors often discount with lower valuation multiples
  • Margins vs. scalability: Unlike SaaS companies with high recurring margins, hardware businesses often operate on thinner profit margins and require physical scaling, leading to lower median revenue multiples
  • Customer concentration & supply chain risks: Many hardware companies rely on a limited number of suppliers or large enterprise customers, adding risk that can suppress multiples

How Hardware Differs from Software and IT Services

Compared to software companies, hardware businesses generally:

  • Lack recurring revenue streams and high-margin scalability
  • Show greater sensitivity to economic cycles and global trade conditions
  • Require significant ongoing investment, which constrains free cash flow

Compared to IT services:

  • Hardware companies are more asset-heavy and product-driven, whereas IT services rely on human capital and knowledge delivery models
  • IT services often enjoy more predictable, recurring cash flows, while hardware valuations fluctuate with demand cycles

M&A Outlook for Hardware

The hardware sector still attracts strategic acquirers. Many buyers seek vertical integration or access to new technologies. Companies with unique intellectual property often command premium valuations. Strong brand equity also supports higher pricing. Leadership in high-growth niches, such as AI chips and edge computing devices, can push multiples above the sector median.

Software

Market Characteristics

Software companies, especially SaaS and enterprise vendors, use highly scalable models. These models are built on intellectual property, not physical assets. Many focus on capturing market share and growing recurring revenue. This often comes at the cost of negative EBITDA and cash flow in early years. Investors accept these short-term losses. Instead, they focus on strong unit economics and the potential for high-margin, predictable income once the business scales.

A table titled Techcompanies/aluation: Tech company valuation multiples shows EV/Revenue, EV/EBITDA, and EV/EBIT multiples with sample sizes, quartiles, and medians. Source: Mergermarket, Aventis Advisors.

Software companies consistently command higher valuations compared to their hardware and IT services peers. Their median revenue multiple of 3.0x and median EBITDA multiple of 15.2x stand well above the averages of hardware (1.4x revenue, 11.0x EBITDA) and IT services (1.3x revenue, 10.2x EBITDA). This valuation premium reflects recurring subscription income, minimal capital expenditure needs, and high scalability unique to software models.

To explore detailed benchmarks and factors driving these multiples, see our Software Valuation Multiples Research.

Valuation Trends and Drivers

Software valuations rose sharply over the past decade, peaking at 6.0x EV/Revenue in 2021. Rapid digital adoption and cheap capital fueled the rise. Investors were willing to tolerate negative EBITDA and cash flow, focusing instead on strong revenue growth and recurring income.

A pair of line charts display tech company valuation multiples from 2015 to 2025, depicting EV/Revenue on the left and EV/EBITDA on the right, with median values and quartile ranges highlighted.

After this peak, valuation levels normalized as interest rates increased and risk appetite shifted. By H1 2025, the median EV/Revenue multiple stabilized near 2.0x, while the median EV/EBITDA multiple settled at 17.6x. These levels indicate a return to more conservative valuation practices, with greater emphasis on positive operating cash flow, sustainable margins, and revenue retention metrics.

Even with this normalization, top-performing SaaS companies still command premium pricing. Many exceed 6x revenue multiples. These businesses often have high recurring revenue and diversified customer bases. They also show strong net revenue retention. These characteristics are highlighted in Aventis Advisors’ SaaS Valuation Multiples Index and SaaS Exit Readiness Dashboard.

Our 2025 SaaS Valuations Webinar shows investor appetite remains strong. Segments tied to AI, cybersecurity, and automation continue to attract attention. These areas still sustain higher valuation multiples than the broader market.

Artificial Intelligence (AI)

Artificial intelligence companies are at the frontier of technology innovation. They differ from traditional software and IT services firms. Many AI businesses are still early in their commercialization. They often focus on product development and customer acquisition rather than near-term profitability. These companies frequently operate with negative EBITDA and cash flow. Even so, they continue to attract strong investor interest. The reason is their transformative potential and ability to scale quickly once adoption accelerates.

AI business models vary widely. Some develop foundational models, while others build applied AI platforms, analytics solutions, or AI-enabled infrastructure. Companies with proprietary algorithms often achieve higher valuations. The same applies to those with unique data sets or strong enterprise integrations. These features provide defensibility and potential for significant market impact.

Valuation Insights

Valuation data for AI companies needs caution. Many figures come from venture funding, which often implies higher valuations than actual M&A deals. Public AI leaders also trade at a premium, driven by liquidity, scale, and investor enthusiasm.

Even so, recent funding shows strong optimism. Hugging Face was valued at about 150x revenue, Atomic AI at 100x, Perplexity at 52x, and OpenAI at 40x. These numbers reflect bets on future dominance rather than current earnings but highlight the premium placed on strategic positioning.

In M&A sales, valuations are usually lower and tied to proven revenue and positive cash flow. Still, AI is one of the few tech segments where median revenue multiples often exceed 25x for larger deals. Buyers are willing to pay for strong technology and early market traction

Trends and Drivers

Investor enthusiasm for AI continues to expand, driven by its applications in cybersecurity, productivity tools, healthcare, financial services, and climate tech. Many premium SaaS businesses are also integrating AI capabilities into their products, further boosting competitive differentiation and valuation potential.

However, as the market matures, differentiation between hype and proven performance is becoming critical. Companies with defensible intellectual property, proven use cases, and scalable, recurring revenue models are best positioned to sustain higher valuation multiples over the long term, while those lacking demonstrable traction risk significant repricing as expectations normalize.

Why you need a technology M&A advisor

Keeping track of current technology valuations is crucial for understanding market trends and effectively timing your exit strategy. Every technology company has its own unique characteristics, much like the individual journeys of their founders. Therefore, it’s vital to consult with experts in the M&A field, especially technology M&A advisors who specialize in the sector and can understand your particular needs.

Technology M&A advisors excel at navigating market dynamics, valuations, and coordinating all crucial workstreams. While you concentrate on managing your business, technology M&A advisors work tirelessly to ensure that no detail is overlooked and advocate for the best possible deal. Their success is closely linked to yours through a success fee, and their influence on the final sale price can be considerable.

About Aventis Advisors

Aventis Advisors is an M&A advisor for IT and software companies. We believe the world would be better off with fewer (but better quality) M&A deals done at the right moment for the company and its owners. Our goal is to provide honest, insight-driven advice, clearly laying out all the options for our clients, including the one to keep the status quo.

Get in touch with us to discuss how much your business could be worth and how the process looks.

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