Enterprise Software: Covid Spurs Record 30 Per Cent Jump In M&A Activity

• Second half of 2020 saw $112 billion in disclosed transaction value in Enterprise Software sector
• Sector saw record 21 transactions worth $1 billion or more   
• Private equity buyers highly active in the space, representing nearly 40 per cent of all deals
 

London, UK – 20 January 2020.The latest Enterprise Software M&A report from Hampleton Partners, the international technology mergers and acquisitions advisor, reveals that the number of deals targeting enterprise software assets has skyrocketed, with 836 deals recorded in the second half of 2020 compared to 641 deals in the first half of 2020.

Total transaction value disclosed across all deals in the space was also sky-high, reaching $112 billion – the highest amount on record.

Valuation multiples remain healthy but have dipped slightly: the trailing 30-month median EV/S multiple came in at 3.4x, while the EV/EBITDA came in at 14x. This is possibly because the pandemic motivated sellers to decrease pricing to a more appetising level for buyers earlier this year.

Meanwhile, the second half of 2020 saw the highest recorded share of private equity and financial buyer transactions: 38 per cent of all deals were carried out by financial buyers, up from 34 per cent in 2018 and 33 per cent in 2019.

Miro Parizek, founder, Hampleton Partners, said:

“The new circumstances and challenges around Covid-19 have created opportunities for software services.

“Businesses that are increasing their digital transformation efforts are looking to software tools to help them navigate the digital sphere. Working from home is becoming widely accepted, so staff need remote access to their files and programmes, meaning a bigger platform for desktop virtualisation and file discovery. Meanwhile, retailers need webshops and apps.

“As a result, digital implementations and high-functioning enterprise infrastructure are needed now more than ever, allowing software and SaaS providers to fill in the gaps. These, in turn, are attracting the attention of prolific acquirers who are looking to own or operate the next indispensable technology.”

• Salesforce acquired Slack for $28 billion
• ICE acquired Ellie Mae for $11 billion
• Thoma Bravo acquired RealPage for $10 billion

Hampleton’s M&A report highlighted the following trends:

• Buyers are looking to enterprise applications that help streamline new processes, particularly supply chain and logistics processes as shipping and digital commerce continue to replace retail. For instance, Coupa Software acquired Llamasoft and its enterprise supply chain management (SCM) software from TPG Capital for $1.5 billion.

• Customer analytics and business intelligence are experiencing a boom in interest, as digital customer acquisition and retention becomes growing concern for digital commerce newcomers and existing players alike. For instance, Twilio acquired customer analytics API provider Segment for $3.2 billion.

• Infrastructure and APIs are key for all businesses looking to improve their digital architecture and ensure their systems are up to speed. For example, Splunk acquired Plumbr’s application performance monitoring (APM) service for an undisclosed amount.

• The healthcare software vertical is front-of-mind for financial sponsors. For example, private equity-backed WellSky acquired care coordination software company CarePort for $1.4 billion.

Parizek concluded: “Looking forward, 2021 has started with a flurry of activit. Hampleton has entered the year with a strong portfolio of mandates including AR/VR, electric vehicles, IoT, digital marketing, e-commerce, payments, digital banking and transformation.

“We anticipate Tech M&A to remain robust in both volume and value this year as technology vendors continue making strategic acquisitions, and traditional industry players and financial buyers add more technology to their portfolios.”

Jane Henry
Marylebone Marketing
jane (at) marylebonemarketing.com
+44 789 666 8155

Note to Editors:
Hampleton Partners’ M&A Market Reports are compiled using data and information from the 451 Research database (www.451research.com).

Download the full Hampleton Partners’ Enterprise Software M&A Market Report 1H2021: https://www.hampletonpartners.com/reports/enterprise-software-report/.

Hampleton Partners is at the forefront of international mergers and acquisitions and corporate finance advisory for companies with technology at their core. Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled advice to tech entrepreneurs and companies which are looking to accelerate growth and maximise value.

With offices in London, Frankfurt, Stockholm and San Francisco, Hampleton offers a global perspective with sector expertise in: Artificial Intelligence, Autotech, Cybersecurity, Digital Commerce, Enterprise Software, Fintech, Healthtech, HR Tech, Insurtech and IT & Business Services. 

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For more information visit https://www.hampletonpartners.com.