2025 proved to be a recovery year for Southeast Asia’s technology M&A market as the region recorded 129 tech M&A transactions, a 7.5% increase compared to 2024. However, further analysis reveals that gains were weaker than the headline suggests, as activity still remained 41% below the 2022 peak and 10% below 2023, making 2025 the third-lowest annual deal count since 2018. That recovery lost momentum in 2026, with only 41 transactions recorded in the first half of the year, down 37% from 65 during the same period in 2025.
What has changed more dramatically is who is buying. Foreign buyers, based outside the target company’s home market, completed 87 acquisitions in 2025, representing a majority share of 67.4% of Southeast Asian tech M&A volume. In 2026, this share of foreign transactions increased to 73.2%, reflecting the growing dominance of foreign buyers in the region.
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The shift raises an important question for the region’s founders and venture investors. If domestic companies are buying less frequently, are cross-border strategic buyers becoming Southeast Asia’s most practical route towards an exit?
The 2025 recovery never became an M&A boom
First, it is important to recognise that Southeast Asia does not currently have a booming technology exit market. While deal activity increased from 2024, much of that improvement reflected a comparison with a particularly weak year rather than a return to the levels seen during the venture funding boom. The number of transactions completed in 2025 remained far below the 2022 peak, while preliminary H1 2026 figures suggest that the recovery has yet to develop into sustained momentum.
Acquisitions involving private equity and venture capital-backed technology companies tell a similar story. The number increased from 44 in 2024 to 51 in 2025, but remained 45% below the 93 transactions recorded in 2022. This matters because Southeast Asia spent much of the previous decade producing a growing population of venture-backed startups. Many of those companies and their investors are now reaching the stage where they need an exit, whether through an acquisition, secondary sale or public listing.
However, the region has become better at creating and financing startups than providing deep local exit markets for them. The challenge is visible across Southeast Asia, where some companies have considered overseas listings in search of deeper pools of capital and liquidity. M&A, which should provide another route to liquidity, remains relatively narrow. Foreign dominance should also not be confused with an M&A boom. While foreign buyers completed 30 of the region’s 41 tech acquisitions, compared with only 11 domestic transactions in H1 of 2026, their share is increasing partly because domestic buyers have retreated faster. In other words, cross-border buyers are taking a larger share of a smaller market rather than driving an M&A boom.
Local technology companies have less appetite to buy
One reason for the shift towards foreign buyers is that Southeast Asia’s technology companies have changed their priorities. During the years of abundant venture funding, well-capitalised regional platforms could use acquisitions to enter new markets, add products or absorb competitors. That strategy has, however, become harder as investors are increasingly demanding profitability and companies are protecting cash. Funding constraints and pressure to prioritise profitability have left many regional technology businesses conserving capital instead of pursuing acquisitions.
This fits the wider change taking place across Southeast Asia’s startup economy. After years of rapid expansion being rewarded, companies are shifting towards reducing costs, concentrating on stronger markets and becoming more cautious about spending on growth. An acquisition thus creates additional risk as the buyer not only has to fund the transaction, but also integrate technology, employees, customers and operations afterwards.
For a regional startup still trying to reach profitability itself, conserving cash may therefore be more attractive than purchasing another business. This creates more space for international companies and well-capitalised regional groups operating across multiple Southeast Asian markets. This also alters the balance of power as startups that once expected competing offers from several local technology companies may now find that their most credible buyers are outside of domestic markets.
Lower valuations are making some startups easier to buy
The reset in startup valuations is another factor. During the funding boom, many founders and investors expected companies to be valued on the assumption that rapid growth would continue. However, once funding slowed and expectations became harder to justify, buyers were much more cautious.
As valuations have gradually adjusted, smaller acquisitions and strategic sales may have become easier to execute, although buyers remain selective. This creates an opportunity for foreign companies, as Southeast Asian startups can offer more than just revenue. An acquisition may provide a faster way to enter Indonesia, Vietnam or another regional market. Moreover, an acquisition may bring local customers, distribution networks, specialist technology or an experienced team that would be difficult to build up from scratch.
Access to valuable technology is also becoming an important acquisition driver. An EY survey found that 59% of Singapore CEO respondents identified the ability to enhance technology or AI capabilities as the most important factor influencing acquisition or divestment decisions. The broader Southeast Asian market also continues to attract international interest in areas such as enterprise software, data centres and cybersecurity. 2025 alone recorded 169 technology transactions worth US$8.9 billion across the broader Southeast Asian market.
For startups, this puts more emphasis on strategic value. Companies do not necessarily need to become a unicorn to attract a buyer. Instead, strong enterprise customers, useful technology, specialist licences or a solid position in one market can all be factors that make a business appealing to acquire.
Investors are under growing pressure to find exits
The supply side of the M&A market is also changing. Many Southeast Asian venture funds raised capital during the stronger funding years of the late 2010s and early 2020s. However, those funds now contain investments that have been held for a prolonged period, resulting in greater pressure to realise investments and return capital to their own investors.
The regional funding slowdown as highlighted above has made that harder. Fewer large follow-on rounds mean some companies cannot simply continue raising private capital indefinitely while IPO opportunities remain limited across much of Southeast Asia. This has contributed to what is increasingly described as an exit overhang, with founders and investors facing pressure for liquidity even though relatively few portfolio companies are converting into acquisitions. The problem is not limited to venture capital. Increasing pressure from limited partners for cash distributions is another important factor, particularly because secondary markets in Asia-Pacific remain less developed than those in the US and Europe.
This pressure does not mean investors will sell companies at any price. Buyers continue to conduct lengthy due diligence while sellers still need to justify their valuations. Strong companies may prefer to wait rather than accept an unattractive deal. However, the longer capital remains locked inside older portfolios, the more important trade sales and secondary transactions are likely to become.
The US$4.2 billion PE exit figure needs context
One headline has emerged which appears to tell a very different story. Southeast Asia generated US$4.2 billion from 11 private equity-backed exits in Q2 2026, the strongest quarterly exit value since early 2022. At first glance, that may sound like the exit market is recovering strongly.
The figure, however, requires context. More than US$3 billion came from a single transaction involving Singapore’s Paragon property. That one deal alone accounted for most of the quarter’s exit value, resulting in a skewed market outlook. Furthermore, the data also covers the general private equity exits across different industries rather than solely technology startups.
As such, the strong PE number does not change the underlying picture for Southeast Asian tech companies. Individual mega-deals can therefore distort aggregate exit values without creating more exit opportunities for the many venture-backed startups still waiting for buyers.
Cross-border buyers may become part of the normal exit route
Southeast Asia has thus gradually become much better at creating and funding startups than it has at giving them reliable ways to exit. This gap is unlikely to disappear immediately as foreign buyers are not yet completing enough acquisitions to call this a healthy M&A cycle. Their growing share also reflects the overall weakness of domestic buyers as much as it reflects stronger international demand.
Still, the change in buyer mix is difficult to ignore. A startup’s most likely buyer may increasingly be something other than a local competitor or another venture-backed technology company. It could instead be a multinational entering a new market.
That changes what founders should prepare for. Clean financial records, strong governance, clear ownership of intellectual property and a valuable customer base are becoming increasingly important. Founders should also focus on building technology or market expertise that gives a potential buyer something it cannot easily develop internally. For investors, relationships with corporate buyers outside the company’s home market may also become increasingly valuable.
Southeast Asia’s tech exit market is thus still too thin to offer founders many easy options. However, if local technology companies continue to conserve cash, selling across borders may become less of an alternative route and more of a normal part of the region’s startup exit playbook.