The enterprise software sector experiences an M&A frenzy with 1,015 recorded deals in the first half of 2022, says Hampleton Partners’ report
The latest Enterprise Software M&A report from Hampleton Partners, the international M&A and corporate finance advisory firm for technology companies, reveals the sector experienced a frenzy of M&A activity during the first six months of 2022, with a total of 1,015 deals recorded, breaking the previous record of 953 deals in 2H2021.
Miro Parizek, founder and principal partner, Hampleton Partners, said: “M&A in the Enterprise Software sector has remained remarkably robust. It’s bucking the overall reduction in global M&A which shrank 27 percent year-on-year due to market confidence-shaking geopolitical and macroeconomic events, including the armed conflict in Ukraine, broken supply chains, and central banks hiking interest rates to control inflation.
“Accelerating demand for cloud-based services continues to be a prominent driver of deals, as businesses modernize and escalate operations to take advantage of high market demand. Plus, buyers appreciate the substantial SaaS-based recurring revenue streams baked into many target companies, providing them with a measure of recession-protection.”
Half-year median valuation multiples increased sharply in 1H2022: the trailing 30-month revenue multiple grew to a record-breaking 5.2x, while the corresponding EBITDA multiple shot up to another record of 20.3x, exceeding pre-pandemic levels.
19 Enterprise Software transactions closed at over $1 billion in 1H 2022, whilst five percent sold for above $100 million. However, the majority of Enterprise Software transactions were below $100 million.
Top Enterprise Software acquirers – past 30 months
The first half of 2022 saw Norway-based Visma graduate to top acquirer with 21 deals, whilst Canadian-based Volaris came a close second, with 20 deals focused on acquiring Enterprise Application and Vertical Application targets.
Visma – 21 acquisitions including Teamleader NV, Mandu, Woffu Job Organizer
Volaris – 20 acquisitions including Alemba, Sunrise Software, Datapro Inc
ThomaBravo – 19 acquisitions including Anaplan, Circle Cardiovascular Imaging, UserZoom Technologies
Largest disclosed Enterprise Software deals of 1H2022
$61.0 bn – Broadcom acquired VMware at 5.3x revenue and 20.6x EBITDA
$13.2 bn – Vista Equity Partners acquired Citrix Systems at 5.2x revenue and 28.0x EBITDA
$13.1 bn – Intercontinental Exchange acquired Black Knight at 11.2x revenue and 24.8x EBITDA
The future of Enterprise Software M&A
Miro Parizek continued: “The Enterprise M&A market is very attractive now for sellers as well as buyers.
“Smaller vendors in niche sectors are having to deal with inflation, talent resourcing challenges, and encroaching competition from tech giants. Many are using the attractive M&A market in Enterprise Software to sell to a trade buyer, merge or partner with a private equity player to defend or establish leadership positions on a global scale.
“Other companies are looking to target technology companies in artificial intelligence, machine learning, and blockchain that can help them solve supply chain issues.
“Overall, this combination of factors and the need to implement quick solutions to take advantage of disproportionately high market demand should drive up enterprise software M&A. However, business leaders are having to carefully monitor the evolving levels of political and economic uncertainty and keep their buying and selling decisions under constant review.”
Hampleton’s Enterprise Software M&A Report analyses transactions, trends and activity across the Enterprise Applications; Business Intelligence & Customer Analytics; Information Management; Vertical Applications; Infrastructure Management and Design, Testing & Simulation segments.
Download the full Hampleton Partners’ Enterprise Software M&A Market Report 2H2022: https://www.hampletonpartners.com/reports/enterprise-software-report/.
