Software sell-off stalls M&A and IPO deals, U.S. bankers say

A broad decline in software stocks has made valuations unstable and is slowing mergers, acquisitions and some planned IPOs, Reuters reported.

A broad sell-off in software shares is beginning to slow deal-making and initial public offerings, according to Reuters. The S&P 500 software and services index posted its worst three-month performance since May 2002, and the sector remains well below its October peak. Bankers and advisers say fast-moving valuation multiples and uncertainty about how artificial intelligence will reshape software business models are complicating price-setting. Key details: - Rapid shifts in peer-company revenue multiples have made benchmarks unstable, leading buyers to fear overpaying and sellers to avoid transacting at trough prices. - Reported outcomes include postponed IPO plans (for example, Blackstone-backed Liftoff Mobile), assets being repriced or sold at lower valuations (for example, the Brex sale), and recent take-privates that left limited gains for some public investors. - Market participants expect more deals to slow, reprice or fail, and some bankers warned the volatility could affect related lending markets; near-term developments are undetermined. Summary: Sustained volatility in software shares has reduced deal momentum and prompted some listings to be paused or delayed. Undetermined at this time.