1st Half 2017 Software Industry Trends

1ST HALF 2017 KEY HIGHLIGHTS

• The Niche segment, which is targeted to specific vertical markets, and the Infrastructure segment combined were responsible for eight of the industry’s top ten highest value deals in 1st Half 2017.
• There were 237 financially sponsored transactions with an aggregate value of $31.12 billion, representing 22 percent of the total volume and 38 percent of the total value, respectively.

1ST HALF 2017 KEY TRENDS

• Total transaction volume in 1st Half 2017 increased 12 percent over 2nd Half 2016, from 985 to 1,099.
• Total transaction value in 1st Half 2017 declined by 18 percent over 2nd Half 2016, from $93.02 billion to $76.63 billion.
• Seven of the industry’s top ten largest deals in 2016 occurred during the second half of the year. Aggregate value in 1st Half 2017 rose 16 percent on a year-over-year basis.
• The median revenue multiple moved slightly from 2.5x in 2nd Half 2016 to 2.3x in 1st Half 2017. The median EBITDA multiple remained constant during this timeframe at 13.3x.
• Transactions in 1st Half 2017 with enterprise values above $160 million received a median revenue multiple of 3.9x, whereas those in the $10-$20 million range had a median revenue multiple of 2.2x.
• The segment with the largest rise in volume in 1st Half 2017 over 2nd Half 2016 was Infrastructure Software with an 21 percent gain, from 132 to 160 transactions.

M&A Market Overview

Berkery Noyes tracked 5,259 Software transactions between 2015 and 1st Half 2017, of which 1,149 disclosed financial terms, and calculated the aggregate transaction value to be $352.76 billion.

Based on known transaction values, we project values of 4,110 undisclosed transactions to be $97.17 billion, totaling $449.93 billion worth of transactions tracked over the past two and a half years.

Disclosed median enterprise value multiples for all segments combined in this report during the last 30 months were 2.5x revenue and 13.3x EBITDA.