NEW YORK — January 2, 2020 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2019 mergers and acquisitions trend report for the Software Industry. The report analyzes M&A activity in the Software Industry during 2019 and compares it with data covering 2017 and 2018.
Total deal volume increased eight percent on a yearly basis. Strategic volume gained five percent whereas private equity backed volume improved 18 percent. Overall value fell 23 percent, from $229.95 billion to $176.56 billion. This followed a 71 percent value rise in 2018 over 2017. The industry’s largest transaction in 2019 was Salesforce’s announced acquisition of Tableau Software, a data visualization and analysis platform, for $15.7 billion. This was the highest value acquisition ever completed by Salesforce.
In terms of valuations, the median revenue multiple year-over-year improved from 3.0x to 3.7x, while the median EBITDA multiple rose from 13.9x to 16.0x. Over the past three years, deals in the $10-$20 million range received a median enterprise value multiple of 2.3x revenue, compared to 3.2x revenue for those in the $20-$160 million range and 5.0x revenue for those in the $160 million and above range.
The number of deals in the Business Software segment, which consists of software designed for general business practices and not specific industry markets, increased 21 percent from 2018 to 2019. Notable Business segment transactions during the past year included the acquisition of Ultimate Software Group, a provider of cloud-based human capital management (HCM) solutions, by an investor group led by Hellman & Friedman, for $10.82 billion; Salesforce’s announced acquisition of ClickSoftware Technologies, a field service and mobile workforce management company, for $1.35 billion; and Vista Equity Partners’ announced acquisition of a majority stake in Acquia, which offers open source web content management and digital experience solutions, for $1 billion.
Transaction activity in the “Niche Software” segment, which is targeted to specific vertical markets, increased six percent in 2019. Notable transactions in the segment’s Healthcare vertical included Dassault Systèmes’ acquisition of Medidata, a provider of SaaS-based clinical development software, for $5.82 billion; private equity firm EQT and Canada Pension Plan Investment Board’s (“CPPIB”) acquisition of a majority stake in Waystar, a revenue cycle management (RCM) company, for $2.7 billion; and Nordic Capital’s announced acquisition of Aris Global, which offers SaaS solutions that help life sciences companies handle drug safety, clinical development, and regulatory compliance,for $700 million.
Other notable Niche segment deals during 2019 included Thoma Bravo’s acquisition of Ellie Mae, a cloud-based platform provider that serves the residential mortgage sector, for $3.31 billion; and Roper Technologies’ acquisition of iPipeline, which offers cloud-based automated processing solutions for the life insurance and financial services sectors, for $1.63 billion.
M&A activity in the Infrastructure Software segment declined three percent over the past year. High profile segment deals included Broadcom’s acquisition of Symantec’s enterprise security business for $10.7 billion; Francisco Partners and Evergreen Coast Capital Corporation’s acquisition of LogMeIn, a provider of remote connectivity and collaboration solutions, for $4.56 billion; and Thoma Bravo’s announced acquisition of Sophos, which offers cloud-native and AI-enhanced cybersecurity software, for $3.86 billion.
A copy of the SOFTWARE INDUSTRY M&A REPORT FOR FULL YEAR 2019 is available at the Berkery Noyes website.