Enterprise Software: 651 Deals and Sky-High Multiples Signal Acquirers' Sprint for Digital Transformation
Hampleton Partners' report reveals $71 billion in half-year disclosed transaction value
London, UK - 02 October 2019.In its latest analysis of global Mergers & Acquisitions activity in Enterprise Software, Hampleton Partners reports the highest deal count ever recorded, with 651 transactions inked over the first half of 2019. Multiples were also sky-high; the trailing 30-month median EV/EBITDA multiple peaked at 17.5x, inching its way up from last year’s levels. Revenue multiples also grew, reaching a record 3.8x in 1H 2019.
Hampleton Partners’ report noted two major M&A trends:
- Large acquisitions and high valuations: disclosed transaction value for the half-year reached $71 billion and consisted of many nine-digit and billion-dollar deals, such as Salesforce’s mammoth acquisition of Tableau’s business intelligence analytics and data visualisation business for $15.1bn and Dassault’s acquisition of Medidata for $5.7bn.
- The highest recorded share of private equity or financial holding company transactions: 34 per cent of all transactions were carried out by financial buyers, up from its peak of 31 per cent in 2017 and around 19 per cent in 2018.
Miro Parizek, founder and principal partner, Hampleton Partners, said: “In spite of any economic slowdown and public market volatility, companies are sprinting towards SaaS and software targets to cover all areas of digitalisation and digital transformation.
“In addition, financial buyers, with access to cheap debt, are eager to capitalise on this drive for digital transformation and are especially targeting the US marketplace, as 73 per cent of PE acquisitions targeted a North American company.”
The top three acquirers in enterprise software over the past 30 months were: Wisetech Global, the Australian logistics software company (22 deals); Vista Equity Partners (19 deals) and Thoma Bravo (17 deals).
Technology innovations that attracted buyer attention included:
Macro visualisations of big data - Google venture arm Alphabet made a $2 billion play for Looker, a provider of big data business intelligence analytics and visualisation, data modelling and discovery SaaS. Google will combine elements of Looker into its Google Cloud suite and allow customers to harness data to help drive their digital transformation. This was also the sub-sector that saw thee biggest deal of the year so far, with Salesforce’s acquisition of Tableau for more than $15bn.
3D software tools - Alibaba acquired InfinityAR, developer of 3D augmented reality software and Adobe made a $105m bet on Allegorithmic, to enable 3D and immersive workflows and tools in its Creative Cloud suite.
Healthcare SaaS - Practice management, data recording and medical billing solutions are proving popular with financial buyers. Valsoft acquired XLDent, a dental practice management SaaS, which provides electronic dental records management, clinical charting, patient check-in and employee time recording.
The future of enterprise software M&A
Parizek concluded: “Although we expect the sector’s record-breaking metrics to ease away from their current peak, the sector is set to remain stable and strong over the long-term. The need to improve business insights and resource allocation will remain imperative for every business, and be spurred by further advances in machine learning and artificial intelligence for SaaS and cloud-based software.”
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Note to editors
Hampleton Partners’ Enterprise Software M&A Market Report 2H 2019 is compiled using data and information from the 451 Research database (www.451research.com).
Download the full Hampleton Partners’ Enterprise Software M&A Market Report: https://www.hampletonpartners.com/reports/enterprise-software-report/.
About Hampleton Partners
Hampleton Partners is at the forefront of international mergers and acquisitions and corporate finance advisory for companies with technology at their core. Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled advice to tech entrepreneurs and companies which are looking to accelerate growth and maximise value.
With offices in London, Frankfurt and San Francisco, Hampleton offers a global perspective with sector expertise in: Automotive Technology, AI, Cybersecurity, Fintech, Healthtech, Hi-Tech Industrials & Industry 4.0, IoT, VR/AR,, Digital Marketing, Enterprise Software, SaaS & Cloud and eCommerce.