For the modern software founder, the most critical shift in 2026 is the transition from tools that merely “store data” to platforms that “execute intent.” As tech giants declare the era of traditional, manual applications over, middle-market founders are finding that legacy CRUD-based systems, once the gold standard of stability, now face a “relevance gap” that can slash an exit valuation by up to 30%. The beginning of 2026 has brought a definitive reality check: it is no longer enough for your software to be a reliable record-keeper; it must prove it can serve a digital workforce where AI agents, not just human employees, are the primary users of your product.
Gui Carlos, Principal at Walden M&A, views this period as a necessary evolution for softwares. Applications primarily serving as basic databases for creating, reading, updating, and deleting data (CRUD) are seeing their defensive moats evaporate. For a founder with a company in the $10 million to $100 million revenue range, failing to address this “agentic deficit” can result in significant discounts to SaaS valuations during a sale. The market is already pricing the AI risk and each software should have a clear strategy on both use of AI and protection from AI.
The Efficiency Paradox: When Your Product Kills Your Seat Count
For decades, the software industry relied on per-seat pricing as the gold standard for revenue. This model assumes humans are the unit of value. AI breaks this assumption. If an AI agent allows a client to perform the work of ten people with only five, a seat-based license becomes a deflationary trap for the vendor’s revenue.
“As much as you increase the benefit you provide to your client, you’re actually harming yourself because they don’t need more employees,” says Carlos. This “efficiency paradox” is forcing a shift toward tokenization or outcome-based pricing. Carlos notes that many clients are moving toward a hybrid model of subscriptions plus tokens to align costs with the value they deliver. Buyers in the current market are paying “good money for present performance,” and they scrutinize whether a software’s unit economics will be disrupted by these shifts in the near future.
The New Moats: Vertical Integration and Proprietary Data
As horizontal tools like generic CRMs face valuation compression, vertical SaaS remains a resilient stronghold. Vertical software with complex applications draws significantly more buyer interest because the issues it addresses are harder for AI to replicate and/or for the clients to adopt.
“The more specific it is, the more protected you are,” says Carlos. He points to highly specialized software, such as systems used by energy companies, where the cost of a mistake is catastrophic. “Nobody will ‘vibe code’ that,” says Carlos, emphasizing that complex business logic and deep ecosystem relationships create a moat AI cannot easily replace. In 2026, a buyer is no longer just paying for code; they are paying for proprietary data loops and the regulatory positioning found in sectors like Manufacturing, Healthcare, and Logistics.
M&A Due Diligence: What Buyers Stress Test Now
During due diligence, buyers now perform what is essentially an “AI audit” to determine how much of a company’s revenue is at risk of being automated away by a AI-native competitor.
“If your software is too simple, the buyer is going to look at it and try to see whether your software will be replaced or not,” says Carlos. To avoid valuation penalties, founders must demonstrate strong unit economics and a stable Net Revenue Retention (NRR). While the median NRR for public companies has fallen toward 100%, commanding a top-tier valuation still requires a positive expansion engine. For companies that are not “AI-first,” Carlos advises embedding enough AI and adjusting the business model to prove sustainability to buyers who price future risks into today’s deal.
Navigating the Current Environment
The current environment offers a unique opportunity for founders to exit or reposition through strategic acquisitions. Private equity firms are currently using “roll-up” strategies to create gravitational mass, cutting costs to increase margins and reinvest in AI capabilities.
“We need to understand what the shareholders want, what the founder wants, and what kind of buyer will be the best fit,” says Carlos. Some owners may prefer a two-stage M&A, equity roll-over, or an earn-out structure to bridge the valuation gap between legacy value and future AI potential. For those with horizontal tools without a key ecosystem built around the product, the advice is to act fast or reposition into a vertical niche to protect what has been built.
Achieving a successful exit in this reset period requires a partner who understands these complex shifts in the tech landscape. By focusing on vertical expertise and modernizing the revenue model, software founders can confidently transition out of their businesses.
Are you a software founder wondering how AI disruption impacts your company’s value? Fill out the form below to start a conversation with Gui Carlos and the Walden M&A team.