There is no shortage of buyers for a well-run software development firm, which is exactly why you should know your number before the first call. Outsourced software development is the deepest and most active buyer market in IT services, and value turns on scale, client retention and nearshore or offshore delivery margin rather than on raw headcount. Buyers do this for a living and tend to anchor their first offer low, so knowing where software development firms actually trade gives you the context to push back. This page benchmarks the EV/Revenue and EV/EBITDA multiples that software development firms change hands at (enterprise value is the deal price adjusted for the target’s debt and cash), what drives the number, and who is buying. It is part of our IT services valuation multiples research.
Software development firms build software for other companies on an outsourced basis. They range from custom application development and product engineering to dedicated nearshore and offshore delivery teams that extend a client’s own capacity. Some sell multi-year managed-delivery engagements, others provide time-and-materials staff augmentation, and the strongest combine deep engineering talent with proven delivery quality and long-tenured client relationships.
These firms are valued on scale, delivery quality, client retention and the margin they earn from a nearshore or offshore delivery base. A large, well-run business with recurring engagements and a diversified client base clears the top of the range, while undifferentiated body shops sit lower.
Across disclosed transactions from 2015 to 2025, software development firms sold at a median of about 1.5x revenue and 11.0x EBITDA. This is the deepest disclosed sample in IT services, so the medians rest on a large body of evidence, but the quartile range is wide. That spread is one of the widest in IT services, which is why delivery margin, client retention and recurring revenue decide where a business lands. At the median, a software development firm with $5 million of EBITDA would be worth about $55 million.
How much do software development firms sell for
Enterprise-value multiples for disclosed software development acquisitions between 2015 and 2025. The median is the typical outcome, and the quartile range shows the spread.
| Multiple | Deals (n) | 1st Quartile | Median | 3rd Quartile | Median deal size |
|---|---|---|---|---|---|
| EV/Revenue | 276 | 0.7x | 1.5x | 2.7x | $26M |
| EV/EBITDA | 157 | 7.9x | 11.0x | 16.0x | $66M |
Source: Mergermarket and Aventis Advisors deal database. Disclosed enterprise-value multiples only, 2015 to 2025. Figures are directional where the disclosed sample is small.
How to read the table: the first quartile (Q1) is the multiple a quarter of the way up the distribution, the median is the midpoint, and the third quartile (Q3) is three quarters of the way up. Half of all deals fall between Q1 and Q3, so the wider that range, the more valuations vary within the sector, and the more growth, margins and recurring revenue decide where a business lands.
What drives a software development valuation
Within the category, the gap between the first and third quartile is large, and that spread is not random. A short list of factors explains most of why one business clears the top quartile while another lands at the bottom.
Scale and delivery quality. A firm with several hundred engineers, mature delivery processes and demonstrable engineering quality commands a premium over a small shop. Acquirers buy proven delivery capability they can plug into existing accounts without rebuilding it.
Client retention and account expansion. Long-tenured clients whose spend grows year on year are the clearest signal of quality. A track record of expanding within accounts is valued far above the ability to keep winning new logos just to stand still.
Nearshore or offshore delivery margin. Buyers pay up for a delivery base in Central and Eastern Europe, Latin America or Asia where a healthy blended rate sits well above the cost of delivery and the bench stays utilized. That delivery margin, and the headroom in the rate card, is what a global buyer can scale across its own client base.
Vertical or technology-stack specialism. Deep capability in a valuable domain such as financial services, healthcare or embedded systems, or in a specific stack such as cloud-native, data or platform engineering, lifts the multiple. Generalist coding for hire does the opposite.
Recurring engagements versus staff augmentation. Multi-year managed-delivery and product-engagement contracts that renew are worth a multiple of pure time-and-materials staff augmentation, which buyers treat as low-margin and easily replaced headcount.
Key-person and client concentration. Heavy reliance on one or two anchor clients, or on a founder who personally holds the top relationships, is the most common reason a multiple is discounted. A diversified base and a delivery organization that runs without the founder de-risks the transaction.
Recent software development deals
Cognizant has been one of the most active buyers. It acquired Mobica of the United Kingdom for about $310m in 2023, an embedded and IoT software engineering firm that runs much of its delivery from Central and Eastern Europe. It also acquired Thirdera of the United States in 2023 for about $430m, though that deal is better read as a platform play than a classic engineering-services acquisition: Thirdera is a ServiceNow Elite partner and platform systems integrator rather than a pure custom-software-development shop, so its economics track the ServiceNow ecosystem more than a general nearshore delivery base. Accenture bought Octo Technology of France for about $130m in 2016 to add digital and software consulting capability, and Perficient acquired Izmul, which trades as Overactive, of Uruguay for about $110m in 2021 to expand its nearshore Latin American delivery base across Uruguay, Colombia and neighboring markets.
Who is buying software development firms
Software development has the most active buyer field in IT services. Digital-native engineering firms such as Globant, Endava and EPAM buy to add talent, verticals and geographic reach. The global majors, led by Accenture and Cognizant, buy for scale and to fold specialist delivery into large accounts. Digital agencies and consultancies such as Perficient and Valtech consolidate nearshore capacity to lift their delivery margin. Behind them sits a deep bench of regional consolidators and private-equity sponsors that back platforms and buy up smaller shops to build them. For a full breakdown of the active acquirers and how they buy, see who is buying software development firms, and for the wider category see our IT services valuation multiples benchmarks.
Methodology
Every figure is an enterprise-value multiple, computed on a like-for-like basis so it reflects what the whole business was valued at rather than the cash that changed hands. The data covers acquisitions of IT and software services businesses worldwide between 2015 and 2025, sourced from Mergermarket and the Aventis Advisors deal database of more than 125,000 transactions. Most private deals are completed at undisclosed valuations, so the disclosed sample skews slightly toward larger transactions and listed buyers. We report the full distribution rather than a single average, because averages are distorted by a handful of premium deals.
Talk to us before you go to market
Aventis Advisors is a boutique M&A firm advising technology and growth companies, with typical enterprise values between EUR 5M and EUR 100M. We take on a limited number of mandates each year, and the partners lead every one from the first call to closing. A first conversation carries no obligation. Contact us at contact@aventis-advisors.com.
Related reading
- IT services valuation multiples, the wider benchmark across every subsector.
- Who is buying software development firms, the most active acquirers and private equity investors.
- Digital Engineering Valuation Multiples and Data & Analytics Valuation Multiples.
- How to sell an IT services business.
- Strategic vs financial buyers and M&A in IT services.
