2018 Key Highlights

  • The industry’s largest transaction in 2018 was IBM’s announced acquisition of Red Hat, which provides open-source software products to the enterprise community, for $32.95 billion.
  • Four of the top five highest value deals during the year occurred in the Infrastructure segment. These four transactions, with a combined value of $67.33 billion, accounted for almost one-third of the industry’s aggregate value year-to-date.
  • There were 544 financially sponsored transactions with an aggregate value of $68.73 billion, representing 25 percent of the total volume and 30 percent of the total value, respectively.

2018 Key Trends

  • Total transaction volume in 2018 remained almost constant over 2017, at 2,206.
  • Strategic volume in 2018 declined four percent over 2017, from 1,729 to 1,662. Private equity backed volume increased nine percent during this timeframe, from 498 to 544.
  • Total transaction value in 2018 rose by 70 percent over 2017, from $134.63 billion to $229.54 billion.
  • The median revenue multiple improved from 2.3x in 2017 to 3.1x in 2018. The median EBITDA multiple saw a slight uptick from 13.3x in 2017 to 13.9x in 2018.
  • The segment with the largest rise in volume in 2018 over 2017 was Business Software, which increased 17 percent, from 444 to 521 transactions.

M&A Market Overview

Berkery Noyes tracked 6,534 Software transactions between 2016 and 2018, of which 1,333 disclosed financial terms, and calculated the aggregate value to be $396.74 billion. Based on known transaction values, we project values of 5,201 undisclosed transactions to be $126.05 billion, totaling $522.79 billion worth  of transactions tracked over the past three years.

Disclosed median enterprise value multiples for all segments combined in this report during the last 36 months were 2.7x revenue and 13.1x EBITDA.