Australian Tech Mid-Market Deals Up 6% in 2025: What Investors Are Targeting Now

In 2025, the mid-market technology sector in Australia is seeing a renewed surge of investor interest. According to the newly released Morgan Business Sales 2025 Technology & IT M&A Report, mid-market deal volumes in Australian technology firms have climbed by 6%, signaling sustained confidence in software, cloud, AI, SaaS, and cybersecurity businesses.

This comes at a time when the broader M&A landscape in Australia remains dynamic amid economic uncertainty, significant inbound capital, and a shifting regulatory environment. As private equity and strategic buyers sharpen their focus, the key question is: what kinds of tech businesses are attracting the most attention, and why?

In this article, we unpack the drivers behind this 6% rise, analyze the themes shaping investor behavior, highlight risks and focal points, and explore what this means for founders, mid-sized tech companies, and M&A advisors.

Understanding the 6% Mid-Market Uptick: What the Numbers Show

Morgan Business Sales Snapshot

Morgan Business Sales’ 2025 report reveals several important data points:

• 6% increase in mid-market (tech & IT) deal volumes in 2025, despite macroeconomic headwinds.
• Premium valuations for software businesses: median EBITDA multiples are around 12.7× for FY24 and YTD 2025.
• International buyer activity is strong: over 50% of these mid-market deals in the past 18 months have involved buyers from the U.S., UK, and Canada.
• Most transactions are concentrated in the sub-$25 million segment, suggesting that smaller software, SaaS, and cloud-native businesses are especially attractive.

These figures reflect a sector where scalable technology models, recurring revenue, and cross-border interest converge, making the mid-market especially rich ground for dealmakers.

Broader M&A Context

• According to RSM Australia, private equity firms remain especially active, chasing businesses with strong recurring revenue, high retention, and scalable platforms.
• From an M&A volume perspective, S&P Global reported 169 M&A transactions in Q2 2025 across Australia, totaling a combined value of US$35.6 billion, a significant uplift in dollar value even if deal count has softened.
• Meanwhile, HLB Mann Judd’s Q3 FY2025 review indicates that while deal count is down compared to the prior year, the average deal size has grown, suggesting that capital is concentrating into fewer, higher-value mid-market opportunities.

Why Investors Are Pouring Into Mid-Market Tech

2.1 High-Quality Recurring Revenue Models

One of the strongest attractions for investors is the recurring revenue nature of many mid-market tech businesses: SaaS, cloud, subscription-based software. RSM Australia identifies AI, cybersecurity, and vertical SaaS as core themes driving interest.

These business models provide predictable cash flow, strong customer retention, and attractive unit economics, exactly what PE firms and strategic buyers want in uncertain macro environments.

2.2 AI & Cybersecurity: The Overarching Themes

• AI: Artificial Intelligence remains a top investment priority. Australian tech companies that embed AI-driven capabilities, whether in analytics, automation, or generative models, are commanding interest.
• Cybersecurity: Given rising digital risk, cybersecurity solutions are a magnet for dealmakers. Strong recurring income and the critical nature of these products make them high-value targets.
• Vertical SaaS: SaaS products tailored to specific industries (healthcare, fintech, logistics) are particularly compelling: they combine niche expertise plus scalable, recurring business.

2.3 Cross-Border Capital

International buyers are playing a major role. According to Morgan’s report, over half of mid-market IT deals in the last 18 months involved foreign buyers, especially from the U.S., UK, and Canada.

RSM adds that the weaker Australian dollar, plus stable political and regulatory institutions, have made Australian tech assets particularly attractive to global private equity.

2.4 Strategic Consolidation & Platform Plays

Many mid-market buyers are looking not just for single asset acquisitions, but platform plays: companies they can bolt other businesses onto or scale via M&A. Morgan notes that a large number of targets are in the sub-$25 range, ideal for consolidation.

Sector specialization is another motif: buyers are often consolidating in cloud services, cybersecurity, or data analytics, creating scaled platforms that benefit from synergies and product cross-sell.

Sector Spotlight: What Kinds of Businesses Are Winning

Cloud & Infrastructure Tech

Cloud-native businesses, especially those offering IaaS, PaaS, or cloud management tools, are highly sought after. These firms benefit from secular tailwinds: enterprises migrating workloads, rising adoption of hybrid cloud, and demand for managed cloud services.

Legacy infrastructure providers are also seeing deals. According to legacyadvisors.io, acquisitions of cloud infrastructure players and even semiconductor firms are prominent, driven by growing demand for AI compute.

Software-as-a-Service (SaaS) & Vertical Applications

SaaS continues to be a sweet spot. Whether targeting horizontal enterprise workflows (ERP, CRM) or vertical needs (healthcare scheduling, education platforms), recurring subscription revenues are key. Investors are drawn to companies that can scale with limited incremental cost once product-market fit is proven.

Vertical SaaS is particularly appealing in regulated or specialized industries: buyers can capitalize on domain knowledge, recurring contracts, and customer stickiness.

Cybersecurity

Security is non-negotiable in modern IT. Mid-market cybersecurity firms that offer next-gen, AI-enhanced threat detection, identity management, or data protection are high on investor radars. These companies often boast strong renewal rates, comprehensive offerings, and defensible IP.

AI & Data Analytics

Pure AI play and data analytics companies are increasingly viable mid-market acquisitions. Whether they offer embedded AI in enterprise tools, predictive analytics, or automated workflows, these businesses align with macro trends and are primed for scaling.

Climate Tech & Quantum

RSM’s 2025 tech investment trends also mention climate tech (especially solutions that combine sustainability with digital efficiency) and quantum computing as a service (QCaaS) as emerging thematic areas.

These niche but high-potential sectors are drawing select investor interest not yet frothy, but part of the mid-market M&A narrative.

Geographic & Cross-Border Dynamics

Inbound Investment

As highlighted, over 50% of mid-market tech M&A involves foreign buyers.

• U.S. strategic and financial investors view Australia as a stable, high-quality destination for tech M&A.
• European and Canadian buyers are also active, attracted by strong SMB SaaS businesses and the innovation pipeline.

Domestic Consolidation

Local players are not standing still. Mid-market tech companies are being acquired by both other regionals and national incumbents, forming consolidation chains in cloud, managed services, and cybersecurity.

Currency & Macro Tailwinds

Australia’s currency has been favorable for international investors. As RSM notes, the lower Aussie dollar makes deals more attractive to foreign capital.

Meanwhile, deal timelines are being influenced by regulatory changes (e.g., proposed merger-control law updates) that could accelerate or hinder transactions.

Valuation Trends, Multiples & Performance

Premium Multiples for Tech

Morgan’s report shows median EBITDA multiples of 12.7x for mid-market tech firms.
These are strong valuations, especially in an uncertain environment, indicating buyers are willing to pay for quality, growth, and recurring revenue.

Comparison with Broader Markets

• In the broader APAC region, the Moore Australia mid-market M&A report notes that IT target median EBITDA multiples increased from 12.6× in FY24 to 16.1× in FY25 in some cases.
• Meanwhile, S&P Global data shows fewer deals overall in Q2 2025, but a 250.5% increase in total transaction value, emphasizing large pockets of deal concentration.

Strategic vs. Financial Buyers

• Private Equity: Many PE firms are targeting recurring-revenue software companies in the mid-market, betting on growth and strong unit economics.
• Strategic Buyers: Corporations are acquiring to build out platform capabilities (cloud, security, analytics), not just to enter new verticals.

Risks, Challenges & Watch-Outs for Investors

Macroeconomic and Regulatory Headwinds

Even though deal volume is up, broader macro uncertainty persists. Currency risk, changing interest rates, and the cost of capital could tighten mid-market valuations or slow deal execution.
Regulatory change is also a concern: as RSM notes, merger-control reforms expected in 2026 may drive deal timing decisions.

Integration Risk

Mid-market tech deals often come with integration risk: acquired firms may have different cultures (technical vs commercial), or scaling recurring revenue may require investment. Buyers must plan for customer retention, tech integration, and roadmaps.

Talent Risk

Technology firms, especially AI, SaaS, and cybersecurity, are talent-intensive. Post-acquisition, retaining key engineers, founders, and senior management is critical for sustaining growth, but can be difficult with cross-border deals or private equity exits.

Valuation Compression Risk

While multiples are high, they may compress if growth slows or cost pressures mount. Large PE firms fueling M&A must maintain discipline or risk overpaying for growth that does not materialize.

Strategic Implications for Stakeholders

For Founders & Mid-Size Tech CEOs

• Optimise for Recurring Revenue: Focus on SaaS models, churn management, and retention.
• Position for M&A: Build strong financials, recurring margins, and scalable operations to be attractive to both PE and strategic buyers.
• International-readiness: Given cross-border interest, prepare for due diligence from an offshore buyer considering legal, IP, and governance structures.

For Private Equity Firms & Investors

• Deploy on High-Quality Targets: Prioritize scalable SaaS, cybersecurity, and AI-native companies.
• Use Platform Strategies: Acquire multiple small-mid players to build a consolidated, high-velocity tech platform.
• Structure Smart Deals: Use earn-outs, staged payments, or minority stakes to manage valuation risk.

For Strategic Buyers (Corporations)

• Bolt-on Acquisitions: Fill capability gaps by acquiring boutique tech firms, rather than building everything in-house.
• R&D and Innovation Access: Use acquisitions to gain access to proprietary AI, security tech, or data analytics assets.
• Global Expansion: Leverage Australian mid-market tech companies to expand offshore or deepen local capability.

For M&A Advisors & Intermediaries

• Educate Sellers: Prepare mid-market founders for exit readiness, financials, governance, and scalability.
• Bridge Buyers and Sellers: Highlight cross-border investor interest and premium valuation potential.
• Facilitate Tech Due Diligence: Invest in specialized tech M&A due diligence to validate SaaS/IP, growth drivers, and risks.

Future Outlook: What to Expect Through 2025–2026

• Continued PE Flow: With private equity still flush with dry powder, mid-market tech deals are likely to remain strong, especially in recurring-revenue sectors.
• Cross-Border Activity Will Persist: Offshore investors will continue to target well-run Australian tech businesses, especially in cloud, AI, and cybersecurity.
• M&A Acceleration Before Regulatory Change: With merger-control reforms on the horizon, some deals may transact sooner rather than later, especially those requiring certainty.
• Emergence of “Tech Platforms”: Expect consolidation plays around vertical SaaS and cloud-managed services businesses.
• Valuation Pressure: If growth slows or market volatility returns, multiples could compress, making deal execution timing and structure more important than ever.

Conclusion: Mid-Market Tech Is the Engine of Australia’s M&A in 2025

The 6% increase in Australian tech mid-market deal volume in 2025 is not just a statistical blip: it’s a signal of strength, resilience, and optimism. Investors, both domestic and international, are placing big bets on software, cloud, AI, and cybersecurity companies that offer recurring revenue and strong growth potential.

For founders and CEOs of mid-sized tech firms, this presents a compelling moment to prepare for exit, growth, or partnership. For PE firms and corporates, this is fertile ground for both consolidation and capability acceleration. And for advisors, it’s a golden window to guide clients through what could be a defining wave of tech M&A in Australia.

As capital flows continue to amplify, the winners will be those who combine strong fundamentals, innovation, and operational readiness to execute the deals while navigating risk, integration, and scaling.