Q1 2025: Deal activity remains robust in Benelux Tech sector, while private equity reassesses risks

Strong start to the year

Expectations for the Benelux technology M&A market were high entering 2025. However, following the re-election of Donald Trump as U.S. President and the implementation of new import tariffs, market sentiment has shifted towards uncertainty. Despite this, the first quarter of 2025 showed solid deal activity. According to data compiled by CFI in collaboration with Computable, a total of 160 transactions were recorded.

This figure represents a slight increase over the 150 deals reported in Q4 2024 and a substantial rise from the 141 transactions recorded in Q1 2024:

“The momentum observed at the end of 2024 clearly carried over into Q1 2025,” said Randy de Visser, Director in CFI’s Benelux Technology team. “The first quarter often includes a number of transactions that were initiated but not completed before year-end.” De Visser characterised Q1 as a stable quarter overall, albeit with a visible decline in private equity (PE) activity — a trend that has been building due to rising interest rates and geopolitical uncertainty.

De Visser continued: “We are observing a growing trend of companies remaining private for longer periods. In Q1, the median holding period for European private equity-backed businesses increased to 3.4 years, compared to 2.4 years in 2019. At the same time, new investments continue to outpace exits, with the investment-to-exit ratio rising to 2.6x in Q1, up from 2.3x in 2024. Heightened market uncertainty is contributing to increased caution among sponsors when considering exit opportunities.”

These dynamics have been further exacerbated by recent protectionist trade policies introduced by the Trump administration. “Investors are increasingly hesitant to back companies exposed to tariffs, especially in sectors dependent on cross-border supply chains. While technology — particularly artificial intelligence, cloud computing, and software — may appear less vulnerable, caution persists due to tightening IT budgets on the part of end-users. That, in turn, affects the appeal of these assets from a capital deployment perspective.”

Nonetheless, tech deal activity has remained ahead of the quarterly averages seen in the pre-pandemic years of 2017 to 2019. This demonstrates the sector’s robust positioning for investment opportunities even in macroeconomic volatility. Major growth trends and disruptions in key technologies, such as AI, continue to create investment opportunities for PE firms ready with an ample supply of dry powder.

Private equity and policy uncertainty
“Private equity thrives on predictability,” De Visser continued. “We’re seeing a noticeable slowdown in new platform investments. Early-stage companies are also feeling the impact, as the flow of venture capital becomes more selective. Sale processes are taking longer — where a deal might have closed in six months previously, we now see timelines extending to seven to nine months, largely due to more comprehensive due diligence procedures.”

De Visser added that uncertainty is also delaying exits: “With policy direction from the U.S. remaining volatile, particularly due to Trump’s shifting stance, many investors are holding back. The coming months will be pivotal in determining the trajectory of American trade policy and its global repercussions. Will the EU introduce reciprocal tariffs — for example, on cloud services — or will it limit its response to physical goods, as currently seems likely? And if the disruption subsides, will market stability return? These are questions for which clear answers remain elusive.”

Sustained strategic and add-on activity
Despite macroeconomic headwinds, strategic M&A activity in the Benelux tech sector remained robust during the first quarter. This trend is expected to persist into Q2, with CFI noting continued high levels of advisory activity.

Strategic buyers remain active, and add-on acquisitions to support platform growth continue to attract interest. For example, Main Capital completed several transactions during the quarter, including the acquisition of content management software provider Qonqord by its portfolio company WoodWing. Main has held a majority interest in WoodWing since 2020, supporting its international expansion through prior acquisitions such as Scientia and Expansion.

Another notable consolidator was the Futureproof Group, a cluster of SME-focused IT service providers backed by MKB Fonds. In Q1, the group acquired three regional players: RIN and Steal IT and Andante. “The Benelux IT sector is characterised by a large number of smaller players,” De Visser noted. “Private equity firms often pursue a buy-and-build strategy, aiming to develop a larger, scalable platform that can later be monetised.”

Cross-border investment softens
A notable trend in Q1 was a decline in cross-border transaction volume, particularly from U.S.-based buyers, according to Bart Rutgrink, Analyst at CFI: “The Benelux IT sector continues to attract interest due to favourable fundamentals — including competitive valuations, a highly developed digital infrastructure, strong English proficiency, and a technically skilled workforce,” he said. “However, in the first quarter of 2025, international buyers were less active, likely due to increased global uncertainty. Whether this trend continues in the coming quarters remains to be seen.”

One major cross-border deal that did materialise was U.S.-based fintech giant Fiserv’s acquisition of CCV, an Arnhem-based (Netherlands) provider of POS terminal and transaction services. “This was one of the few landmark deals of the quarter,” Rutgrink added. “It’s a classic example of a U.S. firm acquiring a Benelux company as a strategic entry point into continental Europe.”