Full Year 2020 Software Industry Trends

2020 Key Highlights

The largest deal in 2020 was Salesforce’s announced acquisition of Slack, an enterprise software messaging platform that helps teams and businesses communicate, for $27.48 billion. This was the highest value acquisition ever completed by Salesforce.

Two of the top three largest transactions during the year occurred in the mortgage and real estate sector: Intercontinental Exchange’s announced acquisition of Ellie Mae, a cloud-based platform provider for the mortgage finance industry, for $11 billion; and Thoma Bravo’s announced acquisition of Real Page, which offers property and real estate management software for multifamily, single-family, senior-living, commercial, and other uses, for $9.77 billion.

There were 598 financially sponsored transactions with an aggregate value of $70.31 billion, representing 26 percent of the total volume and 35 percent of the total value, respectively.

2020 Key Trends

Total transaction volume in 2020 decreased by six percent over 2019, from 2,418 to 2,263. On a half year basis, M&A activity gained 14 percent in 2nd Half 2020 over 1st Half 2020, from 1,058 to 1,205.

Total transaction value in 2020 rose by 14 percent over 2019, from $176.49 billion to $200.89 billion. On a half year basis, M&A value nearly tripled in 2nd Half 2020 over 1st Half 2020, from $50.68 to $150.21 billion.

The median revenue multiple declined from 3.7x in 2019 to 3.2x in 2020. The median EBITDA multiple remained constant during this timeframe at 16.0x.

M&A Market Overview

Berkery Noyes tracked 6,911 Software transactions between 2018 and 2020, of which 1,276 disclosed financial terms, and calculated the aggregate value to be $455.82 billion. Based on known transaction values, we project values of 5,635 undisclosed transactions to be $150.90 billion, totaling $606.72 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 3.3x revenue and 15.6x EBITDA.