NEW YORK — July 5, 2012 — Berkery Noyes, an independent mid-market investment bank, today released its first half 2012 mergers and acquisitions trend report for the Software Industry.

The report analyzes merger and acquisition activity in the Software Industry for the first half of 2012 and compares it with activity in the four previous six-month periods from 2010 to 2011.

Berkery Noyes’ data shows that total transaction volume increased six percent over the prior half year, from 742 transactions in second half 2011 to 785 in first half 2012. M&A in the Consumer Software segment increased 29 percent compared to first half 2011, making it the fastest growing segment on a half-to-half year basis. Total transaction value in the Software Industry decreased five percent, from $40.45 billion to $38.49 billion. However, Consumer Software’s value, driven by Facebook’s announced acquisition of Instagram for $1 billion, increased 147 percent.

Among the period’s key trends, both the median EBITDA multiple and the median transaction value declined slightly. The median EBITDA multiple moved from 13.3x to 13.2x, while the median revenue multiple fell from 2.5x to 2.1x.

Transaction volume for software that is used to analyze and manage customer data, a sub-category of the Business Software segment, increased 40 percent between 2010 and 2011. The sector remained nearly constant during the last six months, which was a 33 percent improvement over first half 2010. There were several notable related transactions in first half 2012, such as Intuit’s acquisition of Demandforce for $424 million, Facebook’s acquisition of Tagtile, and IBM’s acquisition of Tealeaf Technology.

“Companies are looking to improve their existing digital marketplaces,” said Jonathan Krieger, Managing Director at Berkery Noyes. “By utilizing Software-as-a-Service (SaaS) analytics tools in particular, businesses are streamlining their communications and attempting to better service their customer base. This in turn can lead to more brand loyalty, repeated interactions, and higher revenues.” According to Krieger, “SaaS businesses generate recurring revenue and their model affords significant visibility into future periods. This continues to get acquirers comfortable with their premium valuations.” On this note, business intelligence transactions in the Software Industry rose 25 percent compared to first half 2011.

Oracle was one of the most active Software Industry buyers in first half 2012, acquiring Taleo Corporation, ClearTrial, Vitrue, and Collective Intellect. The acquisition of Taleo for $1.92 billion was also indicative of the strength in human resource management software, especially cloud-based, a category that increased 39 percent compared to first half 2011. In addition, the median revenue multiple for human resource software companies rose 19 percent. Hellman & Friedman, the most active private equity acquirer in this space, acquired Smart Human Logistics and through its portfolio company Kronos. Strategic human resource acquisitions in first half 2012 included Saba Software’s acquisition of HumanConcepts for $20 million and Cornerstone OnDemand’s acquisition of Sonar6 for $14 million.

A copy of the FIRST HALF 2012 M&A REPORT FOR THE SOFTWARE INDUSTRY is available at the Berkery Noyes website.