Software development tools are evolving rapidly as technology like AI and machine learning, low-code or no-code platforms, and cloud computing gain momentum.
M&A transactions in the software development tool industry have steadily increased over the last 10 years, and they’re on track to set a new record in 2025.
Even so, the space is still highly fragmented, and it has a tremendous wealth of opportunities to offer private market dealmakers.
In this PE Playbook, the Grata team has put together the need-to-know trends for investors considering making moves in the software development tool market, including:
- How the space is fragmented
- M&A activity in the industry
- High-growth market segments
The market map above is not intended to be an exhaustive representation of companies in the space.
Companies that provide services that fall into multiple segments are categorized in this report by their primary offering.
M&A Trends in the Software Development Tool Industry
Transactions
Source: Grata
M&A activity in the software development tool industry has been steadily climbing for the last 10 years as emerging technologies like AI and the Internet of Things have evolved. As of mid-June, total transactions are on pace to reach a new high in 2025.
Most Active Financial Sponsors in the Software Devlopment Tools Space
Source: Grata
Thoma Bravo leads the top financial sponsors in the software development space with 51 acquisitions. Many of its acquisitions offer project management tools.
Grata users can see the entire list of top financial sponsors in the industry — and access more details about each sponsor — here.
Most Active Strategic Acquirers of Software Development Tools
Source: Grata
Constellation Software is the most active strategic acquirer in the software development industry. The firm has made 55 relevant acquisitions, which include mobile application development tools.
Grata users can see the entire list of top strategic buyers in the industry — and access more details about each sponsor — here.
Software Development Tool Industry Overview
Market Distribution
Geography
Source: Grata
The software development industry offers opportunities around the globe. Currently, the US leads by number of companies, with around 57k software development tool producers. The UK, Germany, and India are also prominent players.
Source: Grata
In the US, the densest pockets of software development companies can be found in states with major tech hubs, like California, New York, and Texas. But opportunities span across the entire country.
Investors should pay particular attention to areas that are home to prestigious universities with strong technical talent pools, such as Massachusetts.
Virginia is also emerging as a hotspot for software development due to its proximity to Washington, D.C. Cities like Richmond, Fairfax, and Newport News also have strong communities of tech workers.
Ownership
Source: Grata
Even with acquisitions steadily increasing over the last decade, there is no shortage of opportunity for dealmakers in the software development space. The top 10 companies control less than 3% of the market.
Currently, there are just under 139k companies producing software development tools that are ripe for acquisition.
Segment Distribution
Source: Grata
This report focuses on the following segments of the software development tool industry. Grata users can see curated lists of some of the companies used to create each segment by clicking the links below.
- Project Management: These tools help software developers plan projects, assign tasks, and stay organized.
- Testing: These tools allow software developers to assess the quality and function of their projects.
- Integrated Development Environments (IDE): IDEs are software applications that combine multiple software development tools in a single interface. Developers use IDEs to code, build, debug, and test without switching between different systems.
- Version Control Systems (VCS): VCS tools allow developers to track and manage changes to their project’s codebase.
- Debugging: These tools enable software developers to identify and resolve issues in their code.
Public Comparables
Source: Grata
In the public sphere, VCS and testing tools see the most average revenue by far. As more businesses go digital, and as technologies like AI, ML, and IoT continue to advance, software development projects are becoming more complex. That means efficient development processes are crucial. VCS tools allow large enterprises with complex codebases to keep track of changes, streamline workflows, and ensure seamless code integration. Likewise, testing tools are essential for ensuring these complex coding projects work properly.
Notably, IDE companies are seeing the second-highest average growth rate of the segments analyzed in this report. These applications help streamline workflows and processes by consolidating multiple software development tools in one place — a productivity game-changer for highly complex projects.
Private Comparables
Source: Grata
Dealmakers have an array of choices when it comes to high-growth private software development sectors. Debugging and project management take the top two spots for highest average growth rate.
However, investors interested in the software development industry should consider the VCS sector first. Unlike the other markets analyzed in this report, VCS tools have not yet raised capital. This, combined with the high growth rate and rising demand for VCS services, could give savvy dealmakers an opportunity to establish themselves as leaders in the space.
Notable Software Development Tool Acquisitions
Source: Grata
Quality & Reliability S.A. Acquires Squaredev
In March, Quality & Reliability S.A. purchased Squaredev for $1.2M. Squaredev is an AI research and product development company. Its offerings include AI platforms, APIs for connecting data to large language models, and on-premise deployment options for data security.
If you’re an investor interested in companies similar to Squaredev, try these:
Learn more about this acquisition — or any of the others listed below — anytime, anywhere using the latest version of the Grata Go mobile app. Get all of the ownership and investment data you need right in the palm of your hand.
NCS Group Purchases Yondu
NCS Group announced in March its acquisition of a majority stake in Globe Telecom’s Yondu in a deal valued at $14.3M. Yondu, a custom software development company, also offers managed IT services, cloud business solutions, messaging gateways, and business productivity and ready-to-use platforms.
The deal launched a joint venture between NCS and Globe Telecom in the Philippines. Ng Kuo Pin, CEO of NCS, said of the move, “Globe and Yondu's deep country expertise, coupled with NCS's technology capabilities, will increase our capacity to further drive business transformation and innovation, especially in the telecommunications sector.
If you’re an investor interested in companies similar to Yondu, try these:
Datadog Acquires Eppo
In May, Datadog completed its $220M acquisition of California-based Eppo. Eppo offers an experimentation platform for data teams, focusing on streamlining feature flagging and experimentation workflows directly on top of the data warehouse.
Datadog said the deal “brings end-to-end observability, feature management, and experimentation into a single, unified platform. By integrating Eppo's capabilities into Datadog Product Analytics, Real User Monitoring, and Session Replay, teams can test changes, analyze user behavior, and measure business impact of code releases at scale, enabling them to move fast and ship with confidence.”
If you’re an investor interested in companies similar to Eppo, try these:
OpenAI Purchases Windsurf
In May, OpenAI announced its acquisition of Windsurf, an AI-assisted coding tool, for a whopping $3B. Once the deal closes, it will mark OpenAI’s largest acquisition to date. Windsurf will complement ChatGPT’s coding capabilities, according to Reuters.
If you’re an investor interested in companies similar to Windsurf, try these:
Digia Plc Buys Savangard
Finland-based Digia Plc entered an agreement to buy Poland-based software development company Savangard for $18.7M.
Timo Levoranta, CEO of Digia, said the acquisition would “expand [the company’s] offering and target market to enable future growth. In 2024, almost 30 per cent of Savangard's business was generated in Europe, outside the Polish market. This transaction also balances out the country-specific risks of our business.”
If you’re an investor interested in companies similar to Savangard, try these:
Stripe Acquires Privy (fka Horkos)
Earlier this month, Stripe entered an agreement to acquire Privy (founded as Horkos) for an undisclosed amount. Privy provides authentication, authorization, and data control tooling for developers in the web3 space. Its offerings include self-custodied wallets for users, embedded wallets, powerful connectors, and user management tools.
Privy reportedly powers over 75M accounts across 1,000+ developer teams.
If you’re an investor interested in companies similar to Horkos, try these:
Live Deals
Hundreds of live deals and active mandates are being showcased on the Grata Deal Network. Here are some examples of mandates related to the software development tool industry:
- A Ukraine-based software development company with $25M in revenue, a $3.5M EBITDA, and a 14% margin
- A project management solutions business with $5.5M in revenue, a $1.6M EBITDA, and a 30% margin
If you’re interested in these deals and you want to see more, register to learn more here.
Are you a sell-side advisor interested in generating inbound leads for your data center infrastructure deal? Get started here.
Get the Most Out of the Playbook
If you’re an investor interested in making moves in the software development tool space, Grata can help you put the insights in this article into action.
From in-depth market research to sourcing to pipeline management and relationship nurturing, Grata’s end-to-end dealmaking platform streamlines your workflows so that you can close more deals.
Schedule a demo today to get started.
