What we’re seeing in real operations, beyond headlines and market narratives
Sorry. This article is a bit longer than usual. I promise that wasn’t the plan, but the topic warrants much more than it initially seemed.
In recent weeks, I’ve been asked repeatedly whether at Bondo Advisors we are seeing pressure on software and SaaS company valuations. Inevitably, the conversation ends up discussing whether AI will make software irrelevant.
These discussions have largely been driven by the recent collapse in valuations of publicly listed SaaS companies on the Nasdaq—a decline already visible at the end of last year that has accelerated following the AI agent developments announced earlier this year. Some have even dubbed this phenomenon (with a hint of sarcasm) the “SaaS-pocalypse.”
I’ve also increasingly heard the idea that SaaS was nothing more than a transitional phase.
According to this thesis, SaaS emerged with the internet as a natural evolution of on-premise and locally installed software, enabling a more scalable cloud-based model. From this perspective, it was merely a technological interlude before the true AI era.
In that scenario, software as we know it would gradually disappear. Users would stop using specific applications because AI agents would interact directly with each other, build solutions on the fly, and automatically program whatever each company needed at any given moment.
Depending on who explains it, the outcome ranges from a fully dystopian vision, where humans become unnecessary, to a profoundly utopian one, where machines work for us while we live happily without ever opening Excel again or lifting a finger.
At Bondo Advisors, we’ve long observed significant activity in SaaS companies. This makes sense, as we primarily advise technology companies, and within the tech world, SaaS remains one of the hottest segments.
We are currently advising on two deals already in SPA negotiation, potentially a few weeks from closing, as well as four other SaaS company sales at different stages—a clear reflection of the ongoing interest in this type of business.
Just in Spain, more than 77 SaaS company transactions closed in 2025, as highlighted in our2025 SaaS M&A Report.
All this means we constantly receive questions from founders, investors, and buyers about where the SaaS market is really headed, how valuations are evolving, and what buyers are looking for today.
Inevitably, one forms an opinion—more or less accurate—but it’s based on what we see every day.
Investor and buyer interest in SaaS companies largely comes down to how the SaaS model works.
These are businesses where customers pay monthly or annual fees for tools they use daily. These recurring revenues usually include periodic price adjustments and grow with the customer. New modules, more users, or increased usage generate expansion within the installed base.
When a company has stable historical churn, expansion within existing clients, and new client acquisition, it’s relatively easy to estimate how the business may evolve in the future. This visibility is one reason these companies are so attractive to financial and strategic buyers.
Another key factor is how integrated the software is in the client’s daily operations. In many B2B SaaS models, the solution is connected to key processes and other internal tools. Changing providers involves operational adjustments, training, and risk—something few companies take on without a compelling reason. Hence, clients tend to stay for long periods.
From a financial perspective, many SaaS models combine low CapEx needs with high gross margins. As the business scales, almost all EBITDA converts to cash.
In practice, many SaaS companies combine stability, growth, visibility, and recurring revenue generation—they are essentially cash flow machines.
SaaS companies are usually acquired at higher multiples than companies in many other sectors. This is largely due to how the model itself works.
Buyers and investors are willing to pay more for businesses that combine growth, strong cash generation, and—above all—high visibility into the future continuity of those revenues.
The recent drop in valuations of Nasdaq-listed SaaS companies reflects a reassessment of that perception. The market is beginning to question the degree to which those cash flows maintain the same level of security going forward. There’s also an expectation that this adjustment will gradually flow into private valuations and, consequently, M&A processes and exits.
The argument increasingly heard is that artificial intelligence could change some of the foundations on which the SaaS model is built. Commonly cited reasons include:
Up to this point, these are the arguments explaining why part of the market considers SaaS valuations may need adjustment.
It’s hard not to agree that AI is changing—and will continue to change—the software industry significantly.
The question isn’t so much whether the SaaS model will evolve into something different, but who will lead that evolution. The valuation correction seems to reflect the idea that there’s a significant probability current incumbents won’t be the ones to capitalize on this new phase, but that new players will take their place.
From my perspective, companies already operating in the sector start with important advantages over new entrants. However, those advantages only matter if actively leveraged. Here’s how I see the key points:
In the processes we’re handling at Bondo Advisors, we generally haven’t seen clear pricing pressure like in the public market.
What we are seeing is something different. Buyers and investors are asking far more questions—questions they never asked before. The focus is no longer only on growth, margins, or recurrence, but on something more fundamental: whether the solution will remain relevant in a world where AI is central to company operations.
This makes buyers more selective about which opportunities they analyze in depth. Not all SaaS is perceived equally. Some companies attract significant interest, while others face much more scrutiny from the first contact.
At the same time, many founders assume that adding any AI functionality automatically makes their product more attractive to investors or buyers—as if simply layering AI solves all doubts about future business evolution.
From my perspective, that’s not the real issue. Integrating AI is becoming accessible to everyone; the same models are available to nearly any company. Adding AI features alone does not create a lasting competitive advantage nor necessarily change a company’s strategic position—and buyers know this.
The relevant question isn’t whether a company uses AI, but what it actually changes in its position with clients.
When analyzing a SaaS company today, it’s increasingly important to understand specific issues:
The opportunity AI introduces for many SaaS companies may be the opposite of what some anticipate.
Agents don’t operate in a vacuum—they need reference systems, structured data, and platforms on which to execute actions. In most companies, those platforms already exist and are usually SaaS solutions integrated into daily operations.
In this sense, software’s role is evolving. For years, software helped people work. Increasingly, software is executing work directly. Many solutions are shifting from tools to operational platforms, which may eventually become the infrastructure for agents.
This introduces a significant challenge for many industry founders.
I’ve focused on SaaS because it’s currently one of the most prominent debates in media. But what we’re seeing isn’t exclusive to software.
The same pattern is emerging in many other industries. Two weeks ago, it was AI’s impact on legaltech after Anthropic’s announcements. Tomorrow, it could be consulting firms, marketing agencies, or traditional industries where automation and robotics start changing how work is done and where value is created.
The pattern is similar: AI changes the rules and forces a rethink of the business’s future. The underlying question isn’t whether a sector will disappear, but how existing companies can leverage their knowledge, client base, data, and position to remain relevant in the next stage.
In some cases, it makes sense to invest and evolve the business from within. In others, selling and letting a larger or better-resourced player lead the next phase may be reasonable.
What is increasingly clear is that waiting without deciding is rarely a good strategy. In times of major change, failing to choose a path is often the greatest risk.
If you want, I can also condense this into a polished, readable English article version that’s suitable for publishing on LinkedIn or a company blog. It would keep the ideas intact but remove redundancies and translate idiomatic expressions naturally.
Do you want me to do that?
By Joshua Novick, partner at Bondo Advisors
cloud technology axon
Since Suma Capital’s entry in 2020, Gestcompost has quadrupled its E...
