Q3 2016 Software Industry Trends

Q3 2016 KEY HIGHLIGHTS

• The largest transaction in Q3 2016 and year-to-date was Oracle Corporation’s announced acquisition of NetSuite in the enterprise resource planning (ERP) sector for $9.3 billion. NetSuite’s cloud-based platform provides an integrated solution for ERP, CRM, and e-commerce.
• There were 297 financially sponsored transactions in the 1st 3 Quarters of 2016 with an aggregate value of $48.8 billion, representing 19 percent of the total volume and 34 percent of the total value, respectively.

Q3 2016 KEY TRENDS

• Total transaction volume in Q3 2016 decreased by nine percent over Q2 2016, from 552 to 505. However, volume year-to-date improved two percent compared to the same timeframe in 2015.
• Total transaction value in Q3 2016 rose by 43 percent over Q2 2016, from $44.8 billion to $64.2 billion.

MULTIPLES & VALUE TRENDS

• The median revenue multiple from 2015 through the 1st 3 Quarters of 2016 increased by 25 percent, from 2.4x to 3.0x.
• The median EBITDA multiple from 2015 through the 1st 3 Quarters of 2016 shifted slightly, from 13.3x to 12.6x.

TOP TEN DEALS THROUGH Q3 2016

The top ten deals by value have seen six new additions since our half year report, four of which were completed by strategic acquirers. Three of the industry’s top five highest value deals year-to-date occurred in the third quarter. None of the top ten deals took place in the first quarter.

These six transactions, with an aggregate value of $32.7 billion, represented 25 percent of transaction value in the 1st 3 Quarters of 2016 and 51 percent of Q3 2016 transaction value.