Reaching new record highs as enterprise software market deal activity reports steady stream of business
In its latest analysis of global Mergers & Acquisitions activity in the Enterprise Software and IT Services sectors, Hampleton Partners charts how the digital transformation of every business, from automotive through to healthcare, is driving record deal valuations in these sectors as companies incorporate disruptive technologies into their business models and shift to the cloud, all while having to secure themselves against cyber threats.
The IT services sector aggregate disclosed deal values hit a record high of $30.8bn in the second half of 2017, up 34% from 1H 2017, and up nearly threefold year-over-year. The enterprise software market maintained stable deal activity over the past 30 months, with both transaction volume and multiples remaining steady.
IT services’ largest deal was in the growing online payments sector, with Worldpay’s acquisition by Vantiv for $10.4 billion, valued at a sales multiple of 1.9x and an EBITDA multiple of 18.6x.
Private Equity investors made a big move into IT Services in 2017. Financial buyers, disclosed $7.91bn-worth of investment across 52 deals during the second half of the year, up 33% on the total deal volume recorded in the first six months of 2017, and up 126% year-over-year.
Miro Parizek, founder and principal partner, Hampleton Partners, says: “Companies are dealing with very rapid change, across multiple fronts. It’s a case of digitally transform or die. They’re turning to M&A to navigate quickly and effectively the shifting landscape and satisfy the increasing service expectations of their customers.
“Cyber-security needs to be at the core of every digital transformation, to counter the relentless threats from increasingly sophisticated hackers and malware infection. It’s fuelling the interest from businesses and investors looking to buy security solution providers as well as data management and analytics tools companies that mitigate the risk of them falling victim to an attack.”
The largest announced deal in the UK security category was the $33.6m management buyout of the video business of Digital Barriers, a specialist tech provider to the global surveillance, security and safety markets. The Video Business features a wide range of products across the digital security landscape, including biometric, facial recognition technology, as well as body-worn video solutions.
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