The repricing of software: are we entering the biggest sector reset since cloud?

Capital is still flowing into technology, but it is flowing differently. At one end of the market, foundation model leaders and digital infrastructure players are attracting funding at extraordinary scale. At the other, traditional software businesses face tougher questions on pricing power, defensibility and long-term margin durability. MSA's recent market commentary shows the divergence already at work: buyers remain active but more selective, private equity fundraising has fallen to a seven-year low, and software economics are being re-examined through a far more disciplined lens.

The current moment looks less like a cyclical wobble and more like a structural re-rating. The software sector is not being marked down evenly. Value is migrating. Businesses tied to data, infrastructure, interoperability and measurable productivity gains still command strategic attention. Businesses reliant on legacy seat-based pricing, low switching costs or feature-level differentiation are finding that the old valuation shortcuts no longer hold.

For owners weighing growth, capital raising or exit, the gap between current value and potential value has rarely mattered more. Closing it deliberately, through the kind of structured preparation that sits at the heart of MSA's EBITDA+ SIX STEPS TO SUCCESS™, is fast becoming the difference between a premium outcome and a discounted one.

Why this matters now

For founders, owners and acquirers, the question is no longer whether automation will reshape software. The real issue is who captures the economics, who loses pricing power, and how quickly buyers and investors can underwrite the new model. MSA's current insights suggest the market is warming but not surging. Buyers are pursuing fewer opportunities with greater intent, and they are rewarding assets that show resilience, strong recurring revenue, margin durability and defensible cashflow.

This matters particularly for SME software owners and founder-led businesses. In The AI capital race and what it means for business value in 2026, MSA notes that Anthropic's recent US$30 billion raise at a US$380 billion valuation, alongside OpenAI's reported US$40 billion raise, signals capital flowing at extraordinary scale into technologies that can materially shift enterprise productivity. At the same time, Private equity hits a wall: fundraising at a seven-year low shows global private equity fundraising fell to US$592 billion in the 12 months to June, with high interest rates, stalled exits and an oversupply of managers weighing on investor appetite. The combination is telling: capital is abundant in some corners of technology, and scarce and demanding in others.

The software market is being repriced in layers

Application software is under new pressure

In 2026 predictions for business leaders: what matters most this year, MSA makes the point plainly: SaaS faces structural pressure. Software is being unbundled, much of the sector's revenue is tied to maintenance and migration rather than licences, and intelligent automation is putting seat-based pricing and multi-year migration assumptions under scrutiny. That tension sits at the heart of the current re-rating. The old model assumed human users, sticky subscriptions and slow-moving competition. Those assumptions now look less secure.

None of which makes software less important. Parts of the sector are simply becoming easier to compare, easier to replicate and harder to defend. If user counts flatten because productivity per employee rises, or if pricing shifts from subscription to usage, revenue quality starts to look different. If differentiation sits in workflow convenience rather than proprietary data, distribution or integration depth, valuation compression becomes a rational outcome rather than an overreaction.

Infrastructure, data and orchestration are gaining strategic value

At the same time, strategic capital is still moving decisively into the parts of the stack that enable scale. In Salesforce secures Informatica in $8 billion data play, MSA describes Salesforce's acquisition of Informatica as a move towards data infrastructure dominance, strengthening data interoperability and sovereignty in the face of intensifying competition. MSA also argues the deal could trigger further consolidation across SaaS, cloud and data ecosystems well into 2026.

The pattern is echoed in M&A and capital markets: Australia's week in review, where MSA highlights Atlassian's US$610 million acquisition of The Browser Company and Carlyle's record US$20 billion secondaries fund. Far from a market walking away from technology, these deals show capital being reallocated towards assets that control distribution, data, platform depth or execution leverage.

Confidence has not disappeared, but it has become selective

MSA's broader market view is instructive here. In Is M&A really back in 2026? What business owners need to know, expected EBITDA multiples are trending above 2025 levels, with typical assets averaging 6.8 times and premium assets at 9.8 times. The same piece stresses that buyers are rewarding sticky revenue, strong margins and operational resilience. Rather than indiscriminately marking software down, the market is separating quality from fragility far more aggressively than before.

That gap between software as a category and quality software as an asset is likely to define the next phase of the cycle. Businesses with genuine strategic relevance, proprietary data advantages, embedded workflows or infrastructure value can still attract premium attention. Businesses relying on historical multiples without proving future defensibility may not.

What this means for founders and acquirers

For founders, the implication is not to abandon software. It is to reframe the equity story. Investors want to know whether the product sits in the blast radius of commoditisation or on the right side of the value migration. They want to know whether the business can preserve margin as pricing models evolve, whether revenue remains sticky if user behaviour changes, and whether the company controls something deeper than an interface.

For acquirers, defensibility is becoming a diligence issue as much as a narrative issue. MSA's current thought leadership consistently comes back to preparation, resilience and evidence. Buyers are more process-driven, more forensic and more selective, which means software businesses need to arrive with a clearer case on recurring revenue quality, data strategy, operating leverage and future relevance.

How MSA's methodology fits this market

MSA's advisory framework is particularly relevant in a market where valuation is increasingly tied to readiness and strategic clarity, not just growth. In The Plan: unlocking business potential, MSA's methodology emphasises that a strategic plan should be built around what prospective buyers value and are willing to pay for, with clear responsibilities and deadlines rather than a static strategy document.

In Mind the gap: why owners should strive for a higher business value than expected, MSA describes bridging the gap as a core part of EBITDA+ SIX STEPS TO SUCCESS™, focused on streamlining operations, optimising efficiencies, investing in technology and diversifying revenue streams to move from current value to potential value.

And in Driving business success: the proven process to bridge the gap, MSA sets out the operational disciplines behind that ambition: strategic planning, resourcing the plan, action sessions and advisory committee oversight. In a software market being repriced around defensibility and execution, that framework reads less like preparation for a future transaction and more like a current operating requirement.

Practical questions every software owner should ask now

• Is our revenue model still aligned with how customers will buy software over the next three to five years, or are we relying on seat-based assumptions the market is already questioning?

• Can we demonstrate that our product is defensible because of data, workflow integration, interoperability or switching costs, rather than because we were early?

• If buyers looked at us today, would they see resilience in recurring revenue, margins and cashflow, or a story that depends on market optimism returning?

• Have we built the strategic plan, accountability and evidence base needed to show what the business looks like after technological change, not before it?

• Are we preparing for a broader set of outcomes, including strategic partnerships, licensing structures, acquihire-style deals or partial exits, rather than assuming the old playbook will return unchanged?

Yes, the software sector appears to be undergoing one of its most significant re-ratings since the shift to cloud, but the change is a reallocation of value rather than a blanket collapse. Capital is still available. M&A is still happening. Strategic buyers are still moving. What has changed is the burden of proof. In this market, software businesses need to show not only growth, but durability, relevance and a credible place in the next value chain.

For owners considering growth, capital raising or exit, preparation matters more than ever. Quality assets can still command strong outcomes, but only when they are strategically positioned, operationally ready and framed for the market that exists now, not the one that existed before.

If you are weighing what the repricing of software means for your business value or exit strategy, book a confidential call with the MSA team. You can also explore related insights, including Is M&A really back in 2026? What business owners need to know and The AI capital race and what it means for business value in 2026, in MSA's thought leadership library.