Quarterly Tech M&A Update | Q2 2026

M&A market developments and valuation environment in the second quarter 2026

Lower deal volumes, greater selectivity: AI becomes a defining valuation factor in tech M&A

European tech M&A activity continued to soften in the second quarter of 2026. At the same time, the performance of individual technology segments became increasingly differentiated. Buyers remain active, but are focusing more closely on larger, high-quality assets and applying more disciplined valuation assumptions.

European tech transactions declined to 367 in Q2 2026, down from 432 in Q1 and 593 in Q4 2025. Germany followed the same trend, recording 97 completed transactions compared with 119 in the previous quarter. As a result, activity in the first half of 2026 now trails the comparable period in 2025.

The decline in overall activity does not represent a broad withdrawal of buyers. While the overall market softened, the four technology segments we track moved in the opposite direction, with transaction volumes rising modestly compared with Q1. Application Software remained the most active segment with 216 deals, followed by IT Services with 143 transactions. Semiconductor activity more than doubled from five to 11 transactions, and Systems Software increased from 25 to 33 deals. This points to buyer activity concentrating on a small number of clearly positioned segments even as the broader market loses momentum.

At the same time, disclosed EV/Sales transaction multiples declined across all four segments. The most pronounced movement was recorded in IT Services, where the multiple fell from 5.0x in Q1 to 1.2x in Q2. However, the limited number of disclosed multiples means that individual transactions can materially influence reported segment averages.

Public market performance also became more polarized. Segments with clear exposure to AI and infrastructure posted strong gains in Q2. The selected Semiconductor peer group recorded a share price increase of 72.4%, followed by Technology Hardware at 32.9% and Systems Software at 28.1%. By contrast, IT Services fell 10.8% and Application Software 4.7%.

In our view, AI is increasingly becoming a central differentiating factor in the valuation of technology companies. Buyers are assessing more closely whether AI strengthens a business model’s growth prospects or creates pressure on margins, competitive positioning and long-term earnings durability.

Strategic investors remained the dominant buyer group in the first half of 2026, accounting for 87% of European and 83% of German tech transactions. Cross-border activity also remained high. In Germany, the share held broadly steady at 60%, while in Europe it increased from 44% in 2025 to 53%. International buyers therefore continue to show interest in attractive German technology assets.

Our latest Quarterly Tech M&A Update examines:

transaction activity in Europe and Germany

the diverging performance of key technology segments

current EV/Sales and public market valuations

selected transactions from Q2 2026

and the growing influence of AI on buyer decisions and valuation levels

We hope you enjoy reading the report and look forward to discussing its findings with you.

Oaklins Quarterly Tech M&A Update Q2 2026.pdf Download PDF

Interested in a global perspective on the TMT sector?

We also recommend reading the latest Oaklins TMT SpotOn Q2 2026. While this Quarterly Tech M&A Update focuses on transaction activity and valuation trends across the European and German technology markets, the SpotOn provides a broader global perspective on TMT M&A. It covers regional market drivers across North America, Europe, APAC and Latin America, alongside expert insights into AI, Defense Tech, Digital Media and the Microsoft ecosystem.

TMT Quarterly Spot On Q2 2026.pdf Download PDF