Dealmaking activity in this space has grown immensely over the past decade and that boom has really picked up steam in recent years. From 2020 to 2022, the volume of M&A transactions more than doubled. In the following years, the AI market continued to post steady growth. Dealmaking activity rose by about 21% in 2024 on an annual basis.

And Q1 2025 showed us a strong start to the year as we saw 25% more deals than for the same period last year. PE companies accounted for the buyer in about 20% of all transactions this quarter, although both strategic and financial buyers are continuing to actively pursue AI-enabled technology companies, fueling market growth.

In the first quarter of 2025, buyers preferred to keep their M&A strategies private as only 15% of transactions disclosed their financial terms, keeping with historical trends. Total disclosed M&A deal value reached $21.6B, similar to the same period last year. There were 7 megadeals in Q1.

Looking at VC funding, after peaking in 2021 VC funding for AI companies declined in the following two years and remained volatile in 2024. What 2025 will bring us considering political and economic turbulence remains to be seen. The turbulent landscape for VC funding has encouraged companies to instead pursue M&A strategies for growth and liquidity.

In the first quarter of 2025, service management and business transformation software ServiceNow became the most active buyer making 3 acquisitions in the AI space. Just recently in March, they acquired agentic AI assistant for workforce empowerment Moveworks for $2.9B. In February, ServiceNow bought AI-powered quality management solution Quality 360 from Swedish IT services provider Advani aiming to bolster its capabilities in the manufacturing sector. And finally in January, the company pocketed AI native conversation data analysis platform Cuein to strengthen its agentic AI and reinforce its role as the AI platform for business transformation.

Among other buyers who made 2 acquisitions each are strategic buyers such as Nvidia, CGI Group, Motorola Solutions, hiring platform Recruiter.com, Publicis Groupe, Israeli customer marketing platform Base, French AI radiology and medical imaging company Gleamer, Canadian personalized healthcare platform Treatment AI and private equity firms including Thoma Bravo, New Mountain Capital, Clearlake Capital Group, Cuadrilla Capital and Marlin Equity Partners.