What Buyers Are Looking for in AI and SaaS Company Acquisitions in 2025

As we move deeper into 2025, the M&A landscape for AI and SaaS companies continues to evolve — shaped by macroeconomic pressures, shifting capital markets, and the accelerating integration of artificial intelligence across enterprise software. For founders and CEOs contemplating a sale or capital raise, understanding what buyers are prioritizing today is not just helpful — it’s essential.

Whether the buyer is a strategic acquirer, a private equity platform, or a growth-stage investor, the bar has risen. Valuations are no longer driven by top-line growth alone. Instead, buyers are scrutinizing a more nuanced set of metrics, capabilities, and strategic fit criteria. Below, we explore the key factors driving acquisition interest in AI and SaaS companies in 2025 — and what sellers can do to position themselves accordingly.

1. Demonstrable AI Differentiation — Not Just AI Buzzwords

In 2023 and 2024, many SaaS companies rushed to integrate generative AI features into their platforms. By 2025, buyers have become more discerning. They’re no longer impressed by superficial AI integrations or vague claims of “AI-powered” functionality. Instead, they’re asking:

• Is the AI core to the product’s value proposition? For example, does it drive measurable efficiency gains, automate complex workflows, or enable new capabilities that were previously impossible?
• Is the AI proprietary? Companies that have built their own models, trained on unique datasets, or developed defensible algorithms are commanding higher multiples.
• Is there a clear ROI for customers? Buyers want to see case studies, usage data, and customer feedback that validate the AI’s impact on business outcomes.

In short, AI must be a moat — not a marketing tactic. At iMerge, we’ve seen acquirers walk away from deals where the AI story didn’t hold up under technical diligence.

2. Efficient Growth and the Rule of 40

While growth remains important, buyers in 2025 are laser-focused on efficiency. The Rule of 40 — the sum of revenue growth rate and EBITDA margin — has become a key benchmark for SaaS valuation. Companies that exceed 40% are generally viewed as high-performing, especially in a capital-constrained environment.

Private equity firms, in particular, are favoring SaaS businesses with:

• Consistent YoY growth of 20%+
• EBITDA margins of 15–25% or a clear path to profitability
• Low customer acquisition costs (CAC) and high LTV/CAC ratios

For AI companies, the same principles apply — but with added scrutiny on R&D spend. Buyers want to see that AI investments are translating into scalable, monetizable features, not just experimental burn.

3. Vertical Focus and Domain Expertise

Horizontal SaaS platforms still attract interest, but vertical SaaS and AI solutions — those tailored to specific industries like healthcare, legal, logistics, or financial services — are commanding premium valuations. Why?

• Higher switching costs due to deep integration with industry workflows
• Lower churn and stronger customer loyalty
• Clearer GTM strategies and more defensible market positions

Buyers are increasingly looking for companies that have achieved product-market fit within a niche and can expand from there. A SaaS platform that dominates a narrow vertical often has more strategic value than a generalist tool with broader but shallower adoption.

4. Clean Data Infrastructure and Scalable Architecture

Especially in AI-driven businesses, the quality of data infrastructure is a critical diligence item. Buyers want to know:

• Is the data pipeline robust, secure, and compliant with evolving regulations (e.g., GDPR, CCPA, AI Act)?
• Can the platform scale efficiently as usage grows?
• Is the codebase modular and well-documented, or will integration be a nightmare?

Technical debt is a deal killer. As we noted in Completing Due Diligence Before the LOI, buyers are increasingly bringing in CTO-level diligence teams early in the process. Founders should be prepared to open the hood — and have the documentation to back it up.

5. Predictable, Recurring Revenue with Low Churn

Recurring revenue remains the gold standard in SaaS and AI business models. But in 2025, buyers are digging deeper into the quality of that revenue. Key questions include:

• What percentage of revenue is truly recurring (vs. services or one-time fees)?
• What is net revenue retention (NRR) and gross churn?
• Are there concentration risks — e.g., one customer accounting for 30%+ of ARR?

Companies with NRR above 110% and gross churn below 5% are typically viewed as high-quality targets. As we outlined in What Are the Key Financial Metrics Buyers Look For in a Software Company?, these metrics are often more predictive of valuation than raw ARR growth.

6. Strategic Fit and Synergy Potential

Finally, strategic buyers — whether public software companies or AI platforms — are prioritizing acquisitions that offer clear synergy potential. This could include:

• Access to a new customer segment or geographic market
• Complementary technology that fills a product gap
• Cross-sell or upsell opportunities across existing customer bases

In these cases, valuation may be less tied to financial metrics and more to strategic value. But sellers must still articulate that value clearly. Firms like iMerge often help clients craft a compelling synergy narrative tailored to each buyer — a critical step in maximizing competitive tension and deal value.

Positioning for a Successful Exit in 2025

In today’s market, successful exits are not just about being a good company — they’re about being the right company for the right buyer at the right time. That means:

• Investing in operational discipline and financial clarity
• Building a defensible AI or SaaS product with real customer impact
• Preparing for diligence well before going to market

At iMerge, we work closely with founders to align their exit strategy with buyer expectations — from exit planning and valuation modeling to buyer outreach and deal structuring. In a market where capital is selective and diligence is rigorous, preparation is the ultimate differentiator.

Use this insight in your next board discussion or strategic planning session. When you’re ready, iMerge is available for private, advisor-level conversations.