GRC Software M&A: Will 2025 Be Your Year to Sell?

2025 could well be a watershed year for Governance, Risk, and Compliance (GRC) software companies. With the average data breach now costing U.S. companies $9.36 million according to Statista, and regulatory requirements growing more complex by the day, organizations are investing heavily in GRC solutions, driving the market toward a projected $134.86 billion by 2030 at a CAGR of 13.8% from 2023 to 2030.

We believe this rapid market expansion is bolstered by increasingly favorable market conditions—a convergence that has caught the attention of strategic buyers and investors. For GRC software founders, this may create a compelling window of opportunity. Whether you are actively planning an exit or simply exploring possibilities, understanding the dynamics of 2025—and positioning your company effectively—can help maximize your options in the marketplace.

Market Forces Create a Unique Opportunity

The conditions shaping the M&A landscape in 2025 fall into two categories: broad economic trends and factors specific to the GRC software industry. Understanding both helps explain why 2025 could be an exceptional time for GRC software founders to consider M&A opportunities.

Macro Trends

Interest rates increased sharply over 2022-23, making it more expensive for acquirers to finance deals and driving up competition for target companies. However, the Federal Reserve has cut interest rates twice this fall and is anticipated to cut them again by the end of the year. This could give potential buyers more flexibility in structuring deals and the ability to offer more attractive terms.

We believe the strong stock market performance has also put strategic buyers in a stronger position. With their share prices at historic highs, these companies can use their stock as currency for acquisitions more effectively. This is important for GRC software companies, as strategic buyers often see these acquisitions as crucial to expanding their compliance and risk management capabilities.

Additionally, private equity firms are sitting on over $2 trillion of dry powder. These firms are under pressure to put that uninvested capital to work, and the GRC software sector, with its strong growth metrics and recurring revenue models, may present what we believe to be an attractive opportunity.

Perhaps most importantly, the business environment overall has stabilized since the volatile days of 2021-2023 was volatile. Companies can more easily project revenue and growth more accurately when the market is stable, making both buyers and sellers more comfortable pursuing transactions. This increased predictability, combined with the previously mentioned market conditions, suggests 2025 could present an optimal window for GRC software companies to explore M&A opportunities.

GRC Industry-Specific Drivers

In addition to broad economic conditions, several industry-specific factors are contributing to what we see as an attractive GRC software market.

While Republican administrations historically favor lighter regulation, core compliance requirements in cybersecurity, data privacy, and international trade aren’t going anywhere. Organizations will continue to need to navigate data privacy rules, supply chain requirements, and other regulations across multiple jurisdictions. Even regulatory rollbacks typically create new compliance demands as organizations adjust their processes—increasing rather than decreasing the need for GRC solutions. The need for robust GRC solutions has been reinforced by SEC requirements mandating public companies to disclose material cybersecurity incidents and report their risk management strategies annually.

This sustained demand for GRC solutions spans multiple sectors, with particularly strong growth in banking, financial services, and IT/telecommunications. For potential acquirers, this broad-based adoption represents potential opportunity to expand market share through strategic acquisitions, especially as organizations seek more comprehensive, integrated GRC platforms. We expect that the regulatory landscape will remain complex, particularly for international operations, and think the need for GRC software will continue to increase.

Understanding Buyer Priorities

Buyers typically evaluate companies through two main lenses: core performance metrics and strategic value drivers. Understanding how your company measures up in both areas can help you evaluate your readiness for M&A and identify areas that might need strengthening.

Core Metrics

Buyers and investors have clear expectations about company performance. The focus has shifted away from an emphasis on growth above all and toward profitability, with more balanced metrics that demonstrate sustainable business fundamentals. Companies need to show that they can grow while maintaining healthy margins and efficient operations. A clear path to profitability, if not already achieved, should be well-defined and realistic.

Customer retention rates are another important metric. High retention rates indicate product stickiness and deep integration into customers' operations. This creates a defensible market position that typically leads to higher valuations.

Buyers also pay close attention to efficiency metrics such as the ratio of customer lifetime value (LTV) to customer acquisition cost (CAC). A strong LTV:CAC demonstrates that your company can efficiently acquire customers and generate noteworthy returns from them over time.

Many founders are reluctant to sell when growth and other metrics are strong, but bear in mind that this may be what buyers are looking for. Waiting to sell until growth plateaus could mean possibly leaving money on the table.

Strategic Value Drivers

Beyond core financial metrics, buyers are looking for strategic advantages that set your GRC Software company apart. A well-defined niche market position helps illustrate your company's expertise and competitive moat. Clear differentiation—whether through industry focus, compliance specialization, or specific use cases—makes your company a more attractive acquisition target.

Technology and innovation capabilities also influence buyer interest. AI integration has become particularly valuable, as AI-enhanced GRC solutions can help provide better threat detection and predictive analytics. However, successful AI implementation must exhibit clear customer benefits, not simply follow market trends.

This same principle applies to innovation in content delivery and platform capabilities. Companies that regularly update their offerings to address new regulations and deliver content through engaging formats, such as interactive training modules or automated compliance workflows, demonstrate their ability to evolve with market needs.

Another consideration is your company's potential for expansion. Buyers look favorably on companies that can efficiently extend their platforms into adjacent regulatory areas or compliance requirements. This scalability, combined with regular platform updates to address new regulations, suggests strong potential for post-acquisition growth.

2025—Your Year for M&A?

Current economic conditions and market dynamics could signal opportunities that may maximize your company's potential in 2025. Whether you ultimately decide to pursue a transaction or not, understanding your options is essential to making informed decisions about your GRC software company's future.

To learn more about M&A and whether now might be the right time for you, we recommend reading Why should founders sell when they’re winning? to understand the possible advantages of exploring M&A during growth periods. Our infographic on Common milestones that lead SaaS founders to pursue a transaction examines other personal and professional factors that often influence founders' timing decisions.

This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. The material may contain "forward-looking" information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns and proposed or expected portfolio composition. Past performance is no guarantee of future results and there is no assurance this trend will continue.

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