The six-year growth streak for enterprise software M&A is cooling but peak valuations remain, says report.
The latest Enterprise Software M&A market report from Hampleton Partners, the international technology mergers and acquisitions advisor, reveals that transaction volumes decreased slightly to 620 deals inked in the second half of 2019, but revenue and EBITDA multiples remained astoundingly high at 4.0x and 17.3x respectively.
Artificial intelligence, SaaS, and cloud companies attracted lsrge strategic buyers, including Apple, Adobe, Salesforce, Google and Microsoft. Private equity buyers completed one-third of all enterprise software transactions in 2019, up from 25% in 2018
Miro Parizek, founder, Hampleton Partners, said: “Despite the slight cooldown in deal volume, the overall picture indicates that we’re entering 2020 with continued strong demand for enterprise software assets. Private equity investors continue to harness readily available debt financing for acquisitions and have outbid strategic buyers in leveraged buyouts throughout 2019.
“The never-ending need for businesses to invest in IT, applications and specialist software has also encouraged rival tech giants like Google and Microsoft to increase their M&A activity in the sector, bumping them back up on the list of top enterprise software acquirers over the past 30 months.”
Microsoft made 12 acquisitions in the past 30 months, most recently Mover Inc, Movere Inc and JClarity Ltd – all SaaS companies which it will no doubt use to bulk up its Azure cloud platform. Google racked up 10 acquisitions in the enterprise software sector, with CloudSimple Inc (VMware infrastructure-as-a-service or IaaS), Elastifile (software-defined storage) and Looker (big data analytics SaaS) being most recent.
