M&A Deals For Enterprise Software Reach A Record-Breaking $182bn In 2018

In the second half of 2018, M&A volume in the Enterprise Software sector reached its highest level in five years, as total of 629 deals were recorded, representing an increase of 35% since the low of 465 deals in the second half of 2013.

The latest M&A market reports from international technology mergers and acquisitions advisor, Hampleton Partners, on the Enterprise Software and IT & Business Services sectors revealed that there is consistent growth in transaction volume and multiples and valuations.

Enterprise Software M&A disclosed deal value of $182.2bn in 2018, which is the highest it’s been in five years.

The figure included deals from tech giants such as Microsoft (NASDAQ: MSFT), Oracle (NYSE: ORCL), Salesforce (NYSE: CRM), Adobe (NASDAQ: ADBE) and SAP (ETR: SAP).

“We are witnessing a land grab for innovative software and IT companies,” said Miro Parizek, founder, Hampleton Partners.

“On the one hand, verticals such as healthtech and fintech are experiencing rapid growth and are compelled to update and adapt their systems, software and processes simply to keep up the pace and survive in the face of their competition.

“On the other hand, large strategic and legacy players are pursuing a comeback to the market, acquiring innovative, horizontally applicable software to remain relevant and versatile.

“As the record-high valuations and volumes show, this competition for tech and talent is driving-up M&A valuations to a peak.”

Other significant deals included IBM (NYSE: IBM) spending $33.4bn all-cash on open-source software provider Red Hat (NYSE: RHT).

Meanwhile, Broadcom acquired CA Technologies, an IT management software vendor, for $18.9bn, a premium of approximately 20% over the closing price of CA Technologies’ stock in July 2018.

The deal is expected to drive Broadcom’s long-term adjusted EBITDA margins above 55%.

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