Transition Newsletter – Edition 2

SaaS valuations have reset – the rules are changing

The UK SaaS market has continued to grow steadily, supported by digital adoption and a supportive regulatory environment.

The UK SaaS market continues to grow, underpinned by sustained digital adoption and a supportive regulatory environment, with London remaining a major European investment hub. 

However, valuation dynamics have shifted materially since the Covid‑era peak. Public and private market multiples have reset as investor priorities move decisively toward profitability, revenue quality and defensibility.  

At the same time, rapid advances in artificial intelligence are reshaping perceptions of risk and opportunity across the sector, widening the gap between differentiated and undifferentiated SaaS businesses.  

Against this backdrop, understanding what truly drives SaaS valuations has become more critical than ever.

Private capital’s role in the green transition – UK Private Capital (formerly BVCA)

UK Private Capital have released a report setting out to demonstrate the important role private capital plays in supporting the green transition. 

The industry is a natural partner for the Government’s commitment to reach net zero by 2050, possessing deep pools of capital, a wealth of strategic experience and a focus on long-term value generation.

Accelerating the green transition to a level where we will be able to meet our commitment of net zero by 2050 will require a monumental effort, alongside tens of billions of pounds in additional investment. Here, private capital can provide critical backing that will allow companies to become more sustainable and improve the climate resilience of their operations.

Making progress on climate goals is more than just a moral imperative, it is critical for businesses’ long-term economic viability. That is because embedding sustainability considerations such as decarbonisation can be a critical enabler to enhance operational performance today, as well as contributing to stronger financial returns in the future.

Meeting net zero commitments and ensuring energy security for the UK is even more important in the context of current geopolitical volatility. Private capital’s capacity to provide flexible, long-term investment enables businesses to navigate periods of uncertainty, safeguard continuity and prepare for emerging challenges. 

 At the same time, this investment approach directs resources into sectors that support energy resilience and drive the uptake of low carbon technologies, climate adaptation solutions and robust infrastructure supply chains on which the UK’s energy security and climate preparedness increasingly depends.

 When private capital directs capital into these areas, it not only supports the country’s ability to manage future shocks but also accelerates the transition to a more sustainable, futureproof economy.

Time to Pay: when HMRC’s support comes with sharper edges

Time to Pay (TTP) arrangements have long been seen as offering breathing space for businesses under short‑term cash pressure, allowing tax liabilities to be managed over time while trading continues. But recent experience suggests that HMRC’s approach is hardening and directors should be alert to the potential consequences.

Over the past month, we have seen multiple instances where HMRC has gone beyond discussing payment terms with the company and has instead raised the prospect of directors becoming personally exposed to unpaid tax liabilities. In some cases, this has arisen during TTP discussions, rather than at the point of insolvency.

Artificial Intelligence (AI) in Change and M&A

By Leon Labovitch (Guest author & Network member) 

I recently attended a major London technology convention where over 200 papers on AI were presented. 

What does this tell us?

That AI is now an ever-present part of business, our lives and society.

• AI is intricate with many facets and applications
• Has major implications for how organisations are structured, managed and run
• Source of immense growth for corporations developing AI including Nvidia, Microsoft, Google, Amazon, Meta and Apple
• We should ready ourselves to benefit more from a combined digital and human organisation in readiness for the most efficient and effective future.

So what next, Artificial Intelligence (AI) is a field of computer science that enables machines to simulate human intelligence, such as learning, reasoning, problem-solving, and perception. Unlike traditional software, AI systems analyse vast amounts of data to identify patterns and make autonomous decisions or predictions.

But it’s important to note that AI should not be positioned as just software, but the combination of organisation design, information systems / architecture, business operations and software aligning with business strategy.

Where the use of AI in M&A and post-merger integration can help 

In a recent webinar I explored how artificial intelligence can materially improve post‑merger integration (PMI) outcomes by giving leaders earlier, deeper insight into how integration is actually landing with people and culture — the area where most integrations fail.

Value can often be lost lost because of cultural misalignment, resistance and risk remain invisible for too long. And despite decades of experience, a large proportion of change initiatives and M&A integrations still fail to deliver expected value. 

This is often due to unrealistic expectations and poor visibility into how change is experienced on the ground, especially across culture, sentiment and local execution. By the time problems surface through traditional surveys or escalation routes, they are often entrenched.

AI however can identify patterns in sentiment, recurring themes and early signs of resistance across thousands of data points. This allows organisations to “listen at scale” while still respecting privacy and context. Rather than relying solely on pulse surveys or anecdotal feedback.

Meaning AI can be a practical enabler of better PMI, but not a silver bullet. When used well, it allows leaders to combine human judgement with real‑time insight at scale — making integrations faster, smarter and more genuinely people‑centred, while significantly reducing the risk of value erosion.

In conclusion, the real value of AI-enabled change is better decision-making on behaviours, culture, and engagement during integration. Leaders see risks earlier and continuously, with fewer blind spots, less bias, and less false confidence.

Here is the full webinar: ​Reinventing Post-Merger Integration with AI: Faster, Smarter, More Human – Prompta AI​ and the ​8 Pillars of Change​ method for implementing change which I use.

For more details, or to learn more please contact me Leon@Labovitch.co.uk or visit ​www.labovitch.co.uk​.