April 9, 2013 FEWER LARGE DEALS IN THE SOFTWARE INDUSTRY DURING Q1 2013

Berkery Noyes has released its Software Industry M&A report for Q1 2013.

Transaction volume declined seven percent on a quarter-to-quarter basis. Deal value in Q1 2013 decreased 53 percent over Q4 2012, from $15.8 billion to $7.4 billion. There was one software transaction above the $1 billion threshold, compared to three such deals in Q1 2012.

The top ten largest transactions accounted for 41 percent of the industry’s aggregate value in Q1 2013, compared to 60 percent in Q1 2012. Cisco made one of the industry’s largest deals in the quarter, acquiring Intucell for $475 million. Aside from its $5 billion acquisition of NDS Group in Q1 2012, this was Cisco’s largest Software Industry transaction since it acquired Starent Networks for $2.4 billion in Q4 2009.

The evolution of cloud computing also remains central to many company’s approach to M&A. For example, Amazon Web Services acquired cloud management start-up Peritor, VMware acquired virtualization business Virsto Software, and Oracle acquired cloud infrastructure company Nimbula in Q1 2013. 

“Cloud computing and the ability to leverage big data in the cloud is driving M&A activity, said James Berkery,” Chief Information Officer at Berkery Noyes. “There were several first quarter deals highlighting this trend, including Rackspace’s acquisition of ObjectRocket and Actian’s announced merger with Pervasive Software.”

Berkery continued, “Information technology providers are also looking for software solutions to help make sense of semi-structured and unstructured data. IBM’s recent acquisitions of Star Analytics and StoredIQ, as well as Dell’s acquisition of Kitenga in Q4 2012, are just a few relevant examples.”