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Trend Reports

2014 First Quarter

 
 

2014 l 1st Qtr l Trends Report l Software Industry

Monday, April 07, 2014

Q1 2014 Software Industry Trends Report

Software transaction volume declined four percent over the past three months, from 435 to 419. However, this represented a 14 percent increase compared to Q1 2013. Deal value gained 72 percent, from $22.6 billion in Q4 2013 to $38.8 billion in Q1 2014. This rise in aggregate value was attributable in large part to Facebook's acquisition of Whatsapp, a cross-platform mobile messaging application, for $16 billion. The top ten largest transactions accounted for 61 percent of the industry's total value in Q1 2014, compared to 55 percent in Q4 2013 and 38 percent Q1 2013.

The Niche Software segment, which consists of software that is targeted to specific vertical markets, underwent a ten percent volume increase in Q1 2014. In terms of growth areas within the segment, deal volume pertaining to the Healthcare IT market increased 31 percent. Meanwhile, the largest Niche Software transaction during Q1 2014 was Thoma Bravo's acquisition of Travelclick, which provides cloud-based hotel management software, for $930 million.

Consumer Software volume remained about constant, moving slightly from 79 to 77 transactions. TiVo's acquisition of Digitalsmiths for $115 million and Rovi Corporation's acquisition of Veveo for $62 million in the video search and recommendation subsector were two notable Consumer Software deals. Business Software, after rising 17 percent in Q4 2013, saw a 13 percent decline in volume on a quarter-to-quarter basis. Transaction volume in the segment's human capital management (HCM) subsector increased 33 percent, from 15 to 20 deals.

Infrastructure Software volume decreased 32 percent in Q1 2014. This followed a 13 percent increase from Q3 2013 to Q4 2013. Of note, there were two deals in the cyber-security subset with disclosed values above $100 million: FireEye's acquisition of Mandiant Corporation for $826 million and Palo Alto Network's acquisition of Cyvera for $220 million.



 

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