NEW YORK — April 3, 2017 — Berkery Noyes, an independent mid-market investment bank, today released its Q1 2017 mergers and acquisitions trend report for the Software Industry. The report analyzes M&A activity in the Software Industry during Q1 2017 and compares it with the past four quarters.

Transaction volume experienced a 16 percent gain over the past three months, with a total of 528 acquisitions in Q1 2017. Overall value rose 75 percent, from $29.4 billion to $51.4 billion. The number of deals throughout the past five quarters reached its peak in Q2 2016, whereas value reached its zenith in Q3 2016.

Strategic acquirers completed seven of the top ten highest value software deals in Q1 2017. The industry’s largest deal year-to-date was Intel’s announced acquisition of Mobileye, which develops self-driving technologies, for $14.7 billion. The Mobileye acquisition follows several related transactions in 2016 by high profile acquirers such as Uber’s acquisition of Otto, which develops self-driving technology for trucks, for $680 million; General Motors’ acquisition of Cruise Automation, which develops technology for autonomous vehicles, for $581 million; and Ford Motor Company’s acquisition of SAIPS, a computer vision and machine learning startup that develops technologies for self-driving vehicles. Intel also completed several others deals in this space during 2016 with Itseez, a software machine learning start-up that improves the navigation of self-driving cars; and Intel subsidiary Wind River’s acquisition of Arynga, which provides over-the-air update software for the automotive sector.

Deal volume in the “Niche Software” segment, which is targeted to specific vertical markets, increased 14 percent in Q1 2017. The Niche segment accounted for four of the overall industry’s top ten highest value deals year-to-date. In addition to the Mobileye transaction, this consisted of Vista Equity Partners’ announced acquisition of DH Corporation, a provider of technology solutions to financial institutions, for $3.6 billion, which Vista plans to combine with its portfolio company Misys; McKesson Corporation’s announced acquisition of CoverMyMeds, which offers electronic prior authorization solutions to pharmacies, providers, payers and pharmaceutical manufacturers, for $900 million; and Hexagon’s announced acquisition of MSC Software, a provider of computer-aided engineering (CAE) solutions such as simulation software for manufacturing process development, for $834 million.

The Business Software segment, which consists of software designed for general business practices and not specific industry markets, saw a 29 percent quarterly increase in volume. The Business segment’s highest value deal in Q1 2017 was Blackstone Group’s announced acquisition of Aon’s technology-enabled and human resources platform for $4.3 billion. Other notable Business segment deals year-to-date included Atlassian’s acquisition of Trello, a web-based collaboration software and project management service, for $425 million; Wolters Kluwer Tax & Accounting’s announced acquisition of Tagetik, which provides corporate performance management solutions and services to mid and large sized corporations, for $317 million; and Saba Software’s announced acquisition of Halogen Software, a cloud-based talent management solutions company, for $169 million.

“No matter the business the human capital element exists, thus acquirers across a wide spectrum are showing strong interest in workforce management, recruiting, training, performance reporting, compensation and other functions,” said Sameer Pal, Managing Director at Berkery Noyes. “Employers increasingly recognize there are enormous direct and indirect costs to turnover and addressing that spans the entire employee lifecycle. Technology enablement around the critical needs of finding, hiring, and retaining qualified personnel allows companies to deal with these areas holistically.” Pal continued, “Additionally, given the ongoing proclivity for organizations to distribute their work forces, continued outsourcing of functions and business processes, and the progress being made in supporting technology areas, knowledge management and collaboration platforms are becoming even more prolific.”

M&A volume in the Infrastructure Software segment increased 27 percent in Q1 2017. Regarding value, four of the industry’s top ten largest acquisitions year-to-date occurred in the Infrastructure segment. Along these lines were Cisco System’s acquisition of AppDynamics, an application performance management and IT analytics company, for $3.6 billion; Keysight Technologies’ announced acquisition of Ixia, which provides IP network validation and network visibility solutions, for $1.6 billion; Clearlake Capital’s acquisition of LANDesk Software, a provider of IT management software solutions, for a reported $1.1 billion, which will be combined with Clearlake’s portfolio company HEAT Software; and HP’s announced acquisition of SimpliVity, a data management platform focused on hyper-converged infrastructure solutions, for $650 million.

Meanwhile, notable Infrastructure deals during the quarter outside of the top ten list included CA Technologies’ acquisition of Veracode, a provider of cloud-based application intelligence and security verification services, for $614 million; and Madison Dearborn Partners’ announced acquisition of BlueCat Networks, an enterprise DNS solutions provider, for $305 million.

A copy of the SOFTWARE INDUSTRY M&A REPORT FOR FIRST QUARTER 2017 is available at the Berkery Noyes website.