Unity in acquisition talks with Silver Lake and Saudi PIF, Reuters reports

Unity has entered acquisition talks with private equity firm Silver Lake and Saudi Arabia's Public Investment Fund (PIF) at a reported valuation of $25 billion, according to Reuters. Both firms completed the $55 billion buyout of Electronic Arts earlier this year, and Unity now sits near the top of their target list.

What does the approach change for Unity?

The consortium discussed the $25 billion figure before Unity released its latest financial results, sources told Reuters. Those results marked a turning point: Unity posted its first GAAP-profitable quarter, with revenue rising 32% to $622.1 million.

The report lifted Unity's market capitalisation to approximately $21.5 billion, and shares climbed 4% in extended trading. In plain terms, Unity's improving fundamentals have narrowed the gap between its market value and the number investors put on the table.

Sources told Reuters: "Unity has been working with an investment bank to evaluate its options following the approach. No deal is certain, and the plan and terms may still change."

Unity declined to comment. Silver Lake and PIF did not immediately respond to Reuters' request for comment.

How deep is Silver Lake's existing position?

Silver Lake is not a newcomer to Unity's cap table. The firm holds an 8% stake, dating to a $400 million investment in May 2017, when Unity carried a $2.6 billion valuation.

At the time, then-CEO John Riccitiello described the investment as primarily "for safety" as Unity positioned itself to capitalise on the VR and AR markets.

Silver Lake deepened its involvement in 2019. It joined three other investment firms in a tender offer to purchase up to $525 million of Unity shares from common shareholders, at a $6 billion company valuation.

The trajectory since has been steep. Unity completed its Initial Public Offering (IPO) in 2020, reaching a $13.7 billion valuation with $1.3 billion in share sales. At that point, the company had not achieved profitability in its 18-year history. Unity reported its first profitable quarter on a non-GAAP basis in 2023.

Why the timing matters

Unity's operational performance gives the talks context. The company reported its strongest quarter as a public company in the summer, with second-quarter revenue up 24% to $546 million.

That momentum continued into the latest report, which delivered the first GAAP profit — the milestone investors had waited more than two decades to see. A buyer would therefore be acquiring an engine and ads business (Unity's core products serving game developers and mobile monetisation) at the moment its cost structure has finally turned the corner.

For studios and teams building on Unity's engine, an acquisition by the EA-buying consortium raises a familiar question: whether private equity ownership prioritises cash flow over developer-facing investment. The reported caution from sources — no deal is certain, terms may change — leaves that question open.

Reuters' sourcing, and Unity's refusal to comment, mean no timeline is on the table. The signal to watch is whether Unity files a formal process disclosure or the consortium's valuation moves above the $21.5 billion market price.