Software Selloff Slows M&A and IPOs; Tech Valuations Plummet, Buyers Cautious

Feb 11, 2026 - A broad software stock selloff is stalling mergers, acquisitions and IPOs as volatility erodes reliable valuations and buyer confidence. The S&P 500 Software & Services Index posted its worst three-month performance since May 2002, while the sector remains about 25% below its October 28 high as the S&P 500 gains. Dealers note pricing is increasingly volatile, with revenue multiples moving too quickly for buyers and sellers to agree. AI disruption and fear-driven trading are key factors, leading to more take-private transactions, repriced deals and IPO deferrals. Examples include Brex’s $5.15B sale to Capital One and OneStream’s January $6.4B private buyout despite a $6B IPO valuation. Activity extends to Europe, with RELX and Wolters Kluwer down about 20%, and private credit exposure rising as software firms account for roughly 16% of the $1.5 trillion U.S. private credit market. Despite volatility, private equity partners are actively seeking software acquisitions, signaling potential buying opportunities.