B2B Software Leadership Roundtable: Navigating Performance, Deals, and AI in 2025

B2B Software Leadership Roundtable: Navigating Performance, Deals, and AI in 2025

On 3rd April 2025, we hosted a roundtable breakfast at our London offices, with 20 senior executives and investors from the UK’s B2B software ecosystem. Attendees included CEOs and Chairs from across the market, as well as major investors and specialist M&A advisers, from lower to mid-market and large cap.

The discussion focused on three themes: business performance, dealmaking, and the impact of Generative AI.  We also shared findings from a pre-event survey of PE-backed B2B software leaders in the UK.

Delivering Performance in a Complex Market

Our session followed Trump’s “Liberation Day” announcement, adding complexity to the outlook. Despite this, the mood was pragmatic. Executives agreed the fundamentals remain unchanged - delivering outcomes for customers, which requires laser focus. Leaders described restructuring around core products, ringfencing legacy ARR, and reorienting teams for growth and profitability.

Investors echoed this clarity. One said: “Forget the 5% win-rate opportunities - focus on where you win.” This is vital as the market shifts away from multiple expansion. Encouragingly, 75% of respondents are on or ahead of their 2025 performance targets. Many emphasised the importance of cash generation and capital efficiency. “People talk about the Rule of 40 - but not enough in this market talk about cash. You have to fund your debt", said one attendee. We broke down the dynamics of the ARR snowball - strong GRR, NRR, and new logo ARR. From an exit standpoint, investors and advisers agreed that growth commands a premium in valuations - roughly 2x the impact of margin improvement. As one put it, “You can always take cost out,  sustainable growth is the true differentiator.”

Dealmaking: Bifurcated Market and Continued Valuation Stalemate

The conversation around exits and M&A captured the current tension in the UK software market. Dry powder remains abundant, but deal volumes are recovering unevenly. There is still an overhang from the peak valuation levels of 2021, and many businesses need time to grow into those valuations.

The market is bifurcated. A+ assets are trading at 22x+ EBITDA, B- grade closer to 17x. But the market in between is stuck, where owners seek 20-22x, but buyers won't budge from 18-20x. “There’s a lot of nervousness about running a failed process,” one said.

This sentiment reflects broader trends. In 2024, tech M&A activity in the UK and Ireland rebounded after a muted 2023, but 50% of US software sale processes failed to complete - a stat cited by multiple participants. Strategic buyers are active again, but highly selective. Many processes are being run bilaterally, with pricing agreed behind closed doors before incurring full diligence costs.

Our survey data mirrored this complexity. 12% of B2B software leaders expect their PE hold period to exceed seven years, up from the historic 4-5 year norm. This reflects not only valuation hangover but also structural changes in exit timing. PE firms confirmed that continuation vehicles, minority sales, and co-control deals are now common ways to create partial liquidity - delaying full exits.

The mounting pressure from LPs to return capital isn’t going away, as confirmed by many in the room, so the logjam has to break soon. Most agreed that this was likely to happen in H2 2025.

GenAI: Competitive Priority

The impact of Generative AI on B2B software was the final theme of the morning.

What began as cautious exploration in 2023 has accelerated rapidly. In our survey, 42% of companies expect to reduce engineering team sizes within two years due to GenAI, and 29% have already done so. This aligns with broader industry data - according to the U.S. Bureau of Labor Statistics, software engineering employment fell 5-8% in 2024, with GenAI cited as a contributing factor.

But most executives didn’t view AI as a cost-cutting lever - they saw it as a growth and differentiation tool. One CEO shared how GenAI had moved from “low priority to priority number one,” driving internal efficiency and enabling faster product development. The group broadly agreed that accelerating time to market and improving customer-facing features is a more valuable opportunity than reducing headcount.

 

Enterprise customers are keen to adopt - but with caution. Financial services firms, in particular, were cited as reluctant to use public LLMs due to compliance risks. Several participants noted clients who had tried to build their own tools, but were unsuccessful. All of this highlighted an opportunity for smaller, domain-specific models paired with a specialist services layer.

One attendee summed it up: “GenAI can write the code, but it can’t tell you what to build.” Product-market fit, customer insight, and data ownership remain the real moats.

Pricing was a consistent challenge. Firms are shifting from per-seat licensing to consumption-based pricing, particularly for AI functionality - but clients are wary. “We’re trying to build trust,” said one participant. “We don’t want to be greedy now and face price deflation later.”

On the whole, people were bullish on AI. One investor described funding pilots directly from their balance sheet to accelerate innovation across their portfolio. Others pointed to a significant TAM unlock in the market, where labour is being converted into recurring software revenue.

Final Reflections

Across all themes, there was cautious optimism. Performance is good for focused companies. Dealmaking is expected to improve. And Generative AI innovation will shape future success.

We’ll continue these conversations across future roundtables and executive forums. If you’d like to register your interest, do get in touch.