US bankers warn that software market volatility is disrupting major deals and IPOs

A broad selloff in software stocks has increased valuation volatility and is stalling mergers, acquisitions, and initial public offerings in the software sector. This ongoing disruption occurs as rapidly moving peer valuation benchmarks make pricing unreliable, prompting both buyers and sellers to pause or reprice transactions. The situation is significantly slowing deal flow across the industry and risks spillover into related markets such as the private credit market and public listings.

The market environment has become increasingly difficult as the S&P 500 software and services index recently posted its worst three-month performance since May 2002. Currently, the sector remains approximately 25% below its peak recorded on October 28. These market moves have already led to concrete deal effects, including the postponement of the initial public offering for Liftoff Mobile, a company backed by Blackstone Inc. BX. Furthermore, the potential $20 billion listing of Visma NO, a process involving Hg Capital, is also at risk due to the unstable valuation climate.