Q1 2025 Cyber Security update: Resilient demand for mission-critical cyber security services hasn’t translated into deal volumes (yet!)

Demand for Cyber Security services is higher than ever.

Cyber-attacks are increasing in both number and sophistication as more information is stored digitally, there are more connected devices and the lines blur between corporate and personal devices. The cost of cyber-attacks is also increasing in terms of financial loss, reputational damage and regulatory fines. 

In response, cyber security budgets are growing driven by greater awareness of the potential risks in governments, in board rooms and at home. This means spend on cyber security services is increasingly prioritised and demand has remained resilient through-the-cycle.

However, this demand for services has not necessarily translated into deal volumes. Q1 2025 saw deal volumes below the long-term average. Those deals that did happen were characterised by a flight to quality, with only the most attractive assets transacting. We think this slower pace of M&A activity continues to reflect a gap between seller and buyer expectations.

That said, our outlook for the sector remains positive with resilient demand expected to continue – or even accelerate with the growing role of AI and increasing geopolitical uncertainty, plus the recent introduction of US tariffs which will disrupt global supply chains.

Ultimately, we think these macro tailwinds will eventually translate into higher M&A volumes as we continue to see strong appetite from both strategic trade buyers and financial buyers.

Email us to request your copy of Arrowpoint Advisory's Q1 2025 Cyber Security Market Insights.

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