Enterprise Software: Bucking The Trend In The M&A Frenzy

According to a new report by Hampleton Partners, more than 1,000 deals were processed in the enterprise software sector, in the first half of 2022. Bucking the general trend, enterprise software mergers and acquisitions continue to rise. This emerges from the latest global M&A market report from Hampleton Partners. The enterprise software space experienced an absolute M&A frenzy in the first six months of 2022. One thousand fifteen deals were recorded, breaking the previous 953 deals in the second half of 2021.

While global mergers and acquisitions contracted 27 percent between H1 2021 and H1 2022, enterprise software M&A has remained remarkably resilient. The sector enjoyed two consecutive record half-years in the second half of 2021 and the first half of 2022, with an increase in transaction volume of more than six percent and a 16.5 percent increase in the total value of reported transactions. Nineteen transactions were completed during this period for more than USD 1 billion. Five percent were sold for more than USD 100 million. However, the majority of enterprise software transactions were under $100 million.

Enterprise Software Valuation Multiplier Increases To 5.2x

Median valuation multiples rose sharply in H1 2022: the trailing 30-month revenue multiple climbed to a record-breaking 5.2x, while the corresponding EBITDA multiple climbed to another peak of 20.3x, and pre-pandemic levels surpassed.

“Enterprise software mergers and acquisitions have remained remarkably resilient. The sector resists the general decline. This was due to the geopolitical and macroeconomic events that have shaken market confidence. But increasing demand for cloud-based services continues to be a key driver of business deals. Companies are modernising and expanding their operations to take advantage of high market demand,”.

“The M&A market for enterprise software is currently beautiful for sellers and buyers. Smaller players in niche sectors struggle with inflation, recruitment challenges, and increasing competition from tech giants. Many in this sector are taking advantage of the attractive location to sell to another company, merge, or partner with a private equity firm to maintain or expand their leadership position on a global scale. Other companies are specifically looking for artificial intelligence, machine learning, and blockchain technology companies to help them solve supply chain problems,”.

The Most Important Acquisitions Of The Last 30 Months

The largest published deals in the first half of 2022:

• $61.0 billion: Broadcom acquires VMware for 5.3x revenue and 20.6x EBITDA
• $13.2 billion: Vista Equity Partners acquires Citrix Systems at 5.2x revenue and 28x EBITDA
• $13.1 billion: Intercontinental Exchange acquires Black Knight at 11.2 times revenue and 24.8 times EBITDA

The international consulting firm Hampleton Partners reports support company owners, sellers, buyers, and investors in the technology sector in evaluating and planning their own M&A or investment activities. Hampleton Partners makes its reports available to interested parties free of charge. The “Enterprise Software M&A Report 2H2022” is available free of charge. 

Hampleton Partners is a technology M&A advisory firm with offices in London, Frankfurt, Stockholm, and San Francisco that combines extensive transaction experience, industry-specific knowledge, operational know-how, and a mature network of industry contacts to provide M&A for owners and executives of technology companies – carry out projects.

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