NEW YORK — July 6, 2015 — Berkery Noyes, an independent mid-market investment bank, today released its half year 2015 mergers and acquisitions trend report for the Software Industry. The report analyzes M&A activity during the first half of 2015 and compares it with the four previous six-month periods from 2013 to 2014.

Berkery Noyes’ data showed that transaction volume increased three percent in first half 2015. This was the industry’s fourth consecutive half year rise throughout the last 30 months. Deal value fell nine percent on a half year basis, totaling $55.65 billion year-to-date. Private equity backed deals accounted for 42 percent of the industry’s aggregate value in first half 2015, compared to 35 percent in second half 2014 and 17 percent in first half 2014.

The median revenue multiple declined from 3.0x to 2.8x over the past six months. However, this represented a 17 percent rise compared to first half 2014, when the multiple was 2.4x. Of note, deals in first half 2015 with enterprise values above $160 million received a median revenue multiple of 3.8x and median EBITDA multiple of 25.1x, whereas those in the $10-$20 million range had a median revenue multiple of 2.4x and median EBITDA multiple of 13.4x.

Meanwhile, Microsoft was the most active strategic acquirer in first half 2015 with seven transactions. Microsoft has continued to complete M&A deals to bolster its mobile capabilities, as indicated by the recent acquisitions of Datazen, a mobile business intelligence and data visualization service; and Sunrise Atelier, the developer of a mobile calendar application. In addition to these mobile-based deals, Microsoft acquired BlueStripe Software, an application management service that provides performance monitoring and troubleshooting solutions; 6Wunderkinder, a cloud-based task management platform; LiveLoop, a developer of collaboration tools for PowerPoint; Revolution Analytics, an open-source analytics firm focused on the statistical programming language R; and Equivio, an e-discovery software company.

As for software used within specific vertical industries or “Niche Software,” transaction volume increased 11 percent. Four of the industry’s top ten highest value deals year-to-date occurred in the segment, two of which were in the Capital Markets subsector.

Deal volume in the Business Software segment, which consists of software designed for general business practices and not specific industry markets, saw a two percent uptick relative to second half 2014. In terms of notable private equity backed deals in the Human Capital Management (HCM) subsector, Vector Capital acquired Saba Software for $270 million and Frontier Capital acquired a majority stake in Electronic Commerce for $40 million.

Elsewhere in the Business segment, PTC, a developer of software and technology solutions for manufacturers, was one acquirer that has been focusing on the Internet of Things (IoT). This included the acquisition of ColdLight Solutions for $105 million in first half 2015, which follows PTC’s acquisition of Axeda Corporation for $170 million in second half 2014 and ThingWorx for $130 million in second half 2013.

Transaction volume in the Infrastructure Software segment remained about constant during the half year period. This followed a 32 percent increase in second half 2014. Three of the industry’s top five largest deals in first half 2015 were completed in the Infrastructure segment. In addition to Informatica, this consisted of Bain Capital’s acquisition of Blue Coat Systems for $2.4 billion and Raytheon Company’s acquisition of Websense for $1.9 billion, both of which were in the cyber-security subsector. Of note, Websense was previously acquired by Vista Equity Partners for $955 million in 2013 and an investor group led by Thoma Bravo previously took Blue Coat private in 2011 for $1.1 billion.

Another cyber-security deal that made the top ten list in first half 2015 was telecommunications operator SingTel’s acquisition of Trustwave, a data security and compliance solutions firm, for $810 million. Cisco’s $635 million acquisition of OpenDNS, a network security company, just missed inclusion in the top ten.

Other high profile Infrastructure transactions year-to-date in different areas of the segment included EMC’s acquisition of Virtustream, a cloud computing management software company, for $1.2 billion; and CA Technologies’ acquisition of Rally Software, a provider of Agile development software and services, for $480 million.

“Acquirers are demanding a broad array of security capabilities that span the gamut of internal and external network and application users,” said James Berkery, Chief Information Officer of Berkery Noyes. “This includes vulnerability and intrusion detection and prevention, identity management, rogue device identification and other areas.” Berkery continued, “There is a need in the marketplace for solutions that support configuration, provisioning, firmware updates, diagnostics and security, particularly as the range of device types expands.”

A copy of the SOFTWARE INDUSTRY M&A REPORT FOR HALF YEAR 2015 is available at the Berkery Noyes website.