U.S. Tech M&A and IPO Surge Marks a Turning Point for Venture Liquidity
U.S. Mergers and Acquisitions (M&A) activity of Technology companies has roared back in early 2025. Two headline transactions – Salesforce’s bid for Informatica and Google’s agreement to acquire Wiz – have emerged as catalysts, propelling total deal value and volume to levels not seen in over a decade.
At the same time, the tech IPO market shows signs of revival, with the blockbuster public debuts of CoreWeave and Circle restoring public investor confidence.
How to assess the trends behind the M&A boom, the recent reactivation of the tech IPO market, why robust public SaaS earnings could foreshadow a return of liquidity to late-stage startups, and who are the new players buying the future?
Why M&A? A Strategic Tool for Growth
For established tech companies, M&A remains a powerful tool to accelerate growth, acquire complementary capabilities, and deepen customer relationships. In vertical Software, where integration with industry-specific workflows is essential, strategic acquisitions provide immediate domain expertise and installed customer bases.
Consider some of the recent Sway Ventures' portfolio exits, like OpenGov’s acquisition by Cox Enterprises, a privately held conglomerate seeking to expand into digital infrastructure and smart city solutions. By acquiring a leader in government-focused SaaS for x15 revenue, Cox paid $1.8B to gain entry into a high-retention, mission-critical vertical, instantly becoming a player in the public sector technology space.
Similarly, Zebra Technologies (NASDAQ: ZBRA) acquired Fetch Robotics to enhance its automation and robotics offerings for warehouse and logistics customers. This move expanded Zebra’s hardware-software stack into an increasingly automated supply chain—critical for clients scaling e-commerce fulfillment. They faced the ultimate dilemma of buy vs build, and they concluded that paying x21 times revenue was worth.
In another example, LiveAction, a network performance monitoring SaaS company, was acquired by PE-backed BlueCat, looking to roll up infrastructure monitoring assets.
These kinds of platform investments reflect a growing appetite for vertical integration in the software stack, where recurring revenues and sticky enterprise deployments create a compelling growth and monetization path.
Early 2025 M&A Hits Decade-High Levels
Two giant deals have reignited tech M&A in 2025. In May, Salesforce announced an $8B acquisition of Informatica, its largest since Slack, to strengthen its AI and data integration capabilities. Earlier, in March, Google’s $32B all-cash acquisition of Wiz, a cloud security startup, signaled a return to big exits—offering long-awaited relief to venture investors. Together, these $40B+ deals have jumpstarted Tech M&A momentum, validating valuations and injecting liquidity back into the ecosystem. With several other sizable acquisitions following, confidence is rising. After two years of M&A stagnation, the return of “animal spirits” is palpable—setting the tone for a broader resurgence in tech dealmaking.
Vertical Software applications – software solutions targeted at specific industries or domains – are a focal point of this M&A upswing. Nearly half of the 1104 Software company acquisitions in Q1 2025 were vertical-specific deals, slightly higher than a year prior. Healthcare software led the way (21% of vertical SaaS targets), followed by financial services (15%) and real estate (10%) (SEG source). The appeal is clear: buyers prize these companies for their embedded industry workflows, niche market dominance, and high switching costs that create loyal customer bases. In a market where growth and profitability are paramount, vertical SaaS businesses often boast strong retention and steady revenue streams, making them attractive bolt-on acquisitions for larger platforms.
IPO Market Reigniting while Public Tech Shows Strength
After the IPO frenzy of 2020–21 and the sharp freeze in 2022, tech public listings remained scarce—until 2025. As of early June, seven venture-backed tech companies have gone public, collectively valued at $52.28 billion at IPO. Among them, CoreWeave raised $1.5 billion at a $20 billion valuation, and crypto firm Circle pushed its market cap above $18 billion.
Encouragingly, the publicly traded Tech sector is demonstrating remarkable resilience, which bodes well for future exit prospects. Recent earnings reports from cloud software leaders have been strong, reinforcing investor confidence in enterprise tech. For instance, data-cloud provider Snowflake beat expectations and even raised its forward revenue guidance on the back of robust demand for its services. In its latest quarter, Snowflake’s product revenue jumped 26%, prompting the company to boost its fiscal 2026 sales forecast – a clear sign of optimism in IT spending tied to AI and cloud initiatives. Similarly, Cloudflare delivered ~27% year-over-year revenue growth in Q1 and issued upbeat guidance for 2025, indicating continued strength in cloud networking and security. Even the tech titans are exceeding forecasts: Microsoft’s Azure cloud division grew 33% last quarter, a “blowout” result that lifted Microsoft’s stock and calmed fears of a slowdown. These results from Snowflake, Cloudflare, Microsoft and others show that enterprise software demand remains robust – companies are still investing in cloud and AI capabilities despite macroeconomic uncertainties. This resilience in public Tech not only supports stock valuations but also provides favorable comparables for private-market valuation discussions. It suggests that the sector’s fundamentals are intact, which is crucial for reopening the IPO window.
The Next Generation of Tech Acquirers
Over the past 15 years, the West Coast tech giants like Google, Microsoft, Facebook, and Amazon dominated the M&A landscape of VC-backed companies. They’ve been leveraging their scale, data advantages, and cash reserves to consolidate the internet, mobile, and cloud space. But as we enter a new age shaped by AI, bio-digital convergence, robotics, and global fintech rails, a new cohort of acquirers is emerging—firms that will shape the next decade of technology consolidation. Their acquisitions will shape the economic architecture of the 2030s.
AI-first infrastructure players such as NVIDIA, OpenAI (as a proxy of Microsoft), and Anthropic (as a proxy of Amazon) are building end-to-end control over the compute stack, and will increasingly acquire across software orchestration, data tooling, and vertical applications.
Snowflake and Databricks are evolving from horizontal Tech infrastructure players into full-stack platforms, echoing the playbooks of Cisco and Oracle, who expanded from core tech into vertical applications through acquisition. As enterprises demand integrated data-to-decision solutions, these key players are eyeing startups in healthcare analytics, financial modeling, industrial AI, and cybersecurity. Their goal: move beyond data storage and compute to own the workflows built on top. This shift signals a new wave of M&A, where infrastructure leaders climb the stack to capture domain-specific intelligence—and where vertical SaaS startups increasingly become targets, not just tools.
A collision is underway between legacy industrial and defense giants, like Honeywell or Raytheon, and a new breed of full-stack disruptors: the Musk empire (Tesla, SpaceX, xAI) and defense-tech insurgents like Anduril or Palantir. Incumbents are acquiring startups to digitize infrastructure, energy systems, and defense platforms. Meanwhile, the challengers are building AI-native stacks that collapse hardware, software, and autonomy into vertically integrated systems. This tension is transforming the M&A landscape: VC-backed startups in robotics, simulation, energy optimization, and dual-use AI are increasingly acquired not just for growth, but for strategic leverage. Exits are now geopolitical—aligned with competing visions of how intelligence, energy, and defense will converge.
In healthcare, Optum and pharma giants like J&J are absorbing digital therapeutics and diagnostics.
In fintech, players like Stripe, VISA, Revolut and Robinhood are becoming acquisition engines—consolidating the data and payments infrastructure that underpins the digital economy. At the same time, the rise of crypto and decentralized finance (DeFi) introduces open questions: Will value eventually move through permissionless rails, bypassing traditional intermediaries? Can decentralized identity, smart contracts, and tokenized assets challenge the platform dominance of today's incumbents? As these technologies mature, M&A activity increasingly reflects a hedging strategy, with centralized platforms acquiring or partnering with crypto-native players to stay relevant in a world where control over data and value is rapidly decentralizing.
Where yesterday’s giants bought startups to defend ad dollars or e-commerce traffic, the new acquirers are racing to control compute, autonomy, and real-world systems. For founders and investors, understanding this shifting M&A map is essential, not just to anticipate exits, but to navigate the geopolitical and industrial realignment of the next decade.
Outlook: Is Late-Stage Liquidity Set to Return?
Bringing these threads together, the current dynamics point toward a cautiously optimistic outlook for late-stage startup liquidity. The combination of record M&A activity and strong public-company performance creates a healthier environment for exits than the ecosystem has seen in years. Many describe the 2020–2023 period as “parched” for liquidity – now there are signs of relief on the horizon. If the momentum holds, we could indeed see the return of capital flows to growth-stage companies through more acquisitions and select IPOs as confidence returns. Already, the spate of big purchases and initial filings is a welcome change from the sluggish exit pace of last year. True, many heavily funded unicorns remain on the sidelines – companies like Stripe or SpaceX that have long delayed going public. But the logjam is starting to break like the recent IPOs of Corewave and Circle. Importantly, as with OpenGov, Fetch Robotics or LiveAction, buyers are willing to pay for quality, even at steep multiples of revenue. That’s good news for startup founders and their investors: high valuations can be realized in an exit when strategic fit and growth prospects align.
While risks like regulatory holdups and macroeconomic shifts persist, the overall tone is turning positive. Many expect the start of a new virtuous cycle: clearer trade and policy outlooks, stabilized interest rates, and continued tech earnings strength could “shower more liquidity on startupland”. That scenario would validate the thesis for growth-stage investing – positioning portfolios to benefit from a wave of exits and renewed capital recycling.
For those managing and allocating capital, the message is clear: the winds have shifted in favor of liquidity and opportunity. Now is the time to lean into strategies that back leading growth companies, as the pathways to realizing value (through acquisitions or eventual IPOs) are opening up again.
The content herein reflects the personal views of the author and should not be interpreted as representing the views of any organization with which the author is affiliated.
