Who:
- Kroll: A leading global provider of data, analytics, and insights for M&A and financial markets.
What Happened:
- Kroll's Summer 2026 Global Software Sector Update shows growth matters more than margins in software M&A.
- The Rule of 40, a long-held benchmark, no longer explains valuation gaps between subsectors.
- Cursor's $60B acquisition accounted for half of H1 2026's $240B total deal value.
Why It Matters:
- GTM teams must now prioritize growth over profitability to attract buyers.
- Traditional valuation frameworks are becoming obsolete, requiring new metrics.
- The shift signals a broader market focus on long-term potential over short-term margins.
ARM Impact:
- Tab Hopper (Stage 1 (Tab Hopper)): Companies must rethink their growth strategies to align with new valuation norms.
- SaaS Hoarder (Stage 2 (SaaS Hoarder)): Margins above 25% no longer add significant value, shifting focus to scaling.
- ARM (Stage 4 (Autonomous Revenue Master)): Autonomous Revenue Models will need to emphasize growth metrics over profitability.
What to Watch:
- Monitor how other M&A reports and financial analysts respond to Kroll's findings.
- Watch for new valuation frameworks emerging in the software sector.
- Track how this shift impacts smaller B2B companies seeking exits.