We’re pleased to share our latest Software Market Update, wrapping up an eventful year that saw major shifts in market dynamics, a volatile start to the equity markets followed by an equally strong rebound, and continued confidence in technology-driven growth. 

2025 was a record-setting year for M&A. Global deal value hit historic highs, driven by larger average deal sizes and a surge in mega-deals. Private equity focused on intrinsic value, fueling take-private transactions, while strategic buyers leaned into acquisitions to accelerate growth and strengthen competitive positioning. Software businesses remained in high demand, reflecting their critical role in digital transformation and AI adoption. 

IPO activity bounced back after a choppy start to the year, supported by lower volatility and a constructive rate backdrop. In total, 60 IPOs raised $36 billion, with software accounting for nearly 40% of Fall issuance. The Fall window was especially active, generating 25 deals worth $15 billion. While momentum was strong, investors remain selective as evidenced by the variability in post-IPO trading performance.  The confidential IPO backlog continues to grow, setting the stage for a busy 2026. 

Convertible issuance was another standout in 2025, hitting record levels with 65 post-Labor Day deals totaling $50.8 billion. Zero-coupon structures dominated, and investor appetite stayed strong, driving upsizing and aggressive pricing. Issuers locked in attractive terms—average coupon of 1.20% and a 33.75% conversion premium—even against higher dividend yields and SOFR rates. Once again, technology issuers led the charge, representing nearly half of total volume, with software contributing $20.7 billion. 

The leveraged finance market saw a resurgence in opportunistic activity. Loan repricing topped $500 billion for the second straight year, with July setting a monthly record at $221 billion. Refinancing and repricing made up 70% of supply as issuers moved quickly to capitalize on favorable market conditions. High yield issuance reached $310 billion, up 20% from 2024 – the strongest year since 2021. September marked the first $50 billion-plus month since early 2021, and jumbo LBO financings returned, building momentum into year-end. 

BMO remains highly active in client engagements across M&A, financing, and other strategic initiatives and will be pleased to answer any questions or provide further insights. 

Wishing everyone a strong finish to the year, a joyful holiday break, and continued success as we head into 2026. 

To receive the full report, please contact our team.