NEW YORK — October 1, 2015 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2015 mergers and acquisitions trend report for the Software Industry. The report analyzes M&A activity during the three-month period and compares it with data for the six previous quarters.

According to the Berkery Noyes’ latest research, volume underwent a slight uptick over the prior quarter, from 502 to 507 deals. The number of transactions year-to-date increased six percent compared to the corresponding timeframe in 2014. Aggregate value rose 24 percent relative to the previous quarter, from $33.8 billion to $41.7 billion. Of note, four of the highest value software transactions year-to-date occurred in the third quarter, three of which were backed by financial sponsors.

The industry’s largest strategic transaction in third quarter 2015 was the announced acquisition of HERE, a digital mapping and location intelligence business, by car manufacturers BMW Group, Audi Group and Mercedes-Benz for $3.1 billion. HERE was created by Nokia’s $8.1 billion acquisition of Navteq back in 2008. In addition to HERE, there have been several other recent transactions focused on mapping technology such as Apple’s acquisition of Mapsense, a visualization startup, in the third quarter; and Uber’s acquisition of Microsoft’s Bing mapping unit in the second quarter.

In terms of “Niche Software,” which is targeted to specific vertical industries, volume improved 13 percent on a quarterly basis. The segment’s highest value transaction in third quarter 2015 was Vista Equity Partners’ announced acquisition of Solera Holdings for $5.8 billion. Solera provides risk and asset management software and services to the automotive and property marketplace, including the property and casualty (P&C) insurance sector. As for other high value deals in the segment, IBM Watson Health acquired Merge Health, a provider of medical image handling and processing, interoperability and clinical systems, for $1 billion; a private equity consortium led by Permira acquired eBay Enterprise, a provider of commerce technologies and ominchannel operations, for $925 million; and Infor acquired GT Nexus, a cloud-based global supply chain platform, for $675 million.

Deal flow in the Consumer Software segment decreased nearly one-third over the past three months. One notable new acquirer in the space was Adidas with the acquisition of Runtastic, a fitness tracking application, for $239 million. This transaction continues a trend of clothing manufacturers acquiring fitness technology. For example, Under Armour acquired Gritness, a mobile application that helps users find workout activities, in the third quarter. Under Armour also completed two mobile-based deals in first quarter 2015 relating to digital health data, nutrition information, and fitness tracking. This consisted of MyFitnessPal for $475 million and Endomondo for $85 million.

The Business Software segment, which consists of software designed for general business practices and not specific vertical industries, saw volume rise five percent. One notable segment deal during the third quarter was Advance Publications’ acquisition of 1010data, a big data discovery and data sharing platform, for $500 million.

Deal volume in the Infrastructure segment experienced a 21 percent quarterly decline. This followed a 29 percent increase between first and second quarter 2015. Regarding high profile acquirers in the third quarter, Microsoft completed a deal in the cyber-security subsector with the acquisition of Adallom, a startup that monitors the use of cloud-based services, for $320 million. This followed Microsoft’s acquisition of security software developer Aorato in 2014 for a reported $200 million. Both Adallom and Aorato are based in Israel. Another notable cyber-security deal during the quarter was Splunk’s acquisition of Caspida, a threat detection company, for $190 million. There were also several deals in the quarter completed by notable acquirers relating to the Internet of Things (IoT), such as IBM’s acquisition of StrongLoop and Autodesk’s acquisition of SeeControl.

Four of the industry’s top ten highest value deals year-to-date occurred in the Infrastructure segment. The largest transaction in the third quarter and thus far in 2015 was The Carlyle Group’s announced acquisition of Veritas Technologies Corporation, a provider of storage and server management software solutions, from Symantec for $8 billion. Meanwhile, the most active acquirers in the segment through the first three quarters were Thoma Bravo and IBM with four transactions each. In the third quarter Thoma Bravo acquired DigiCert, a provider of SSL certificates and management tools; and Whitebox Security, a data access and governance solutions company. IBM acquired the previously mentioned StrongLoop, a software provider that enables developers to build APIs that connect applications and devices; and Appcore, a cloud automation management platform.

“Threats, intrusions, spam, phishing and other malicious elements show no sign of diminishing,” said James Berkery, Chief Information Officer at Berkery Noyes. “This is leading some vendors to amass a war chest of security assets through M&A.” Berkery continued, “Many organizations are also looking to mitigate information risk by shoring up authorization and authentication capabilities. This includes portal implementations through a unified single sign-on; consolidating information through more effective content management; and applying better analytics to various business processes. Moreover, those in certain vertical markets such as life sciences and financial services must address regulatory concerns as well as ongoing threats of litigation, legal discovery costs and privacy issues. Each of these factors may help spur acquisition activity going forward.”

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