NEW YORK — July 1, 2014 — Berkery Noyes, an independent mid-market investment bank, today released its half year 2014 mergers and acquisitions trend report for the Software Industry. The report analyzes M&A activity during the first half of 2014 and compares it with the four previous six-month periods from 2012 to 2013.

Berkery Noyes’ data showed that transaction volume increased six percent in first half 2014. This was the third consecutive rise in volume examined on a half year basis. Deal value gained five percent, totaling $57.61 billion year-to-date. The median revenue multiple remained nearly constant at 2.4x, while the median EBITDA multiple declined from 10.9x to 9.2x.

The industry’s most active acquirer in first half 2014 was Vista Equity Partners with 12 transactions. Meanwhile, Google was the most active strategic acquirer with 11 software transactions.

As for software used within specific vertical industries or “Niche Software,” transaction volume increased 13 percent, making it the fastest growing market over the past six months. The segment’s largest deal in first half 2014 was Oracle’s $4.4 billion acquisition of MICROS Systems, a provider of point-of sale (POS) and other integrated solutions for the hospitality and retail sectors.

Four of the industry’s top ten largest deals in first half 2014 occurred in the Niche Software segment, three of which were secondary buyouts. The highest value Niche Software deal backed by a financial sponsor was the acquisition of Ipreo Holdings for $975 million. The provider of market intelligence, data, and technology solutions in the capital markets sector was acquired by Blackstone Group and Goldman Sachs’ Merchant Banking Division from Kohlberg Kravis Roberts & Co. (KKR). This followed KKR’s acquisition of Ipreo for $425 million in 2011.

Deal volume in the Business Software segment increased six percent compared to second half 2013. One key trend in the segment is the transition from desktop to mobile that many enterprises are implementing. Corporate IT departments are looking for tools to facilitate this transition, which is a potential reason for the heightened interest in the enterprise mobility subsector. Notable enterprise mobility transactions in first half 2014 included VMware’s acquisition of AirWatch for $1.12 billion and Google’s acquisition of Divide. Other recent deals in the space were LANDesk Software’s acquisition of LetMobile as well as Good Technology’s acquisition of BoxTone and Fixmo. On a related note, acquirers have also been showing an interest in email security solutions, as indicated by deals such as Symantec’s acquisition of NitroDesk in the Infrastructure Software segment.

Regarding other markets covered in the report, the number of deals in the Consumer Software segment increased eight percent in first half 2014. Yahoo! was the most active Consumer Software acquirer with seven acquisitions.

Transaction volume in the Infrastructure Software segment declined 18 percent during the half year period. This followed a 14 percent increase between first and second half 2013. The segment’s largest transaction year-to-date was SanDisk’s acquisition of flash storage business Fusion-io for $1.04 billion. In terms of open source software storage, RedHat was a notable acquirer with the acquisition of Inktank for $175 million. This was RedHat’s first transaction since 2012 and the company’s largest deal since its acquisition of Gluster for $136 million in 2011. RedHat is positioning the Inktank acquisition as complementary to Gluster’s technology, in an effort to better compete with EMC, IBM, and others that offer software-defined storage systems.

“The surge in M&A activity across many of the Software Industry’s sectors is rooted in sound strategy as major technology companies seek greater mass and diversity, formerly emerging technologies mature, and financial buyers look to invest in quality assets,” said James Berkery, Chief Information Officer at Berkery Noyes. “With generally strong balance sheets and healthy income statements, the major strategic buyers are, by and large, seeking acquisitions that offer additional growth opportunities.”

A copy of the SOFTWARE INDUSTRY M&A REPORT FOR HALF YEAR 2014 is available at the Berkery Noyes website.