Six-year growth streak for enterprise software M&A slows but peak valuations remain, says Hampleton report

The latest Enterprise Software M&A market report from Hampleton Partners, an international technology mergers and acquisitions adviser, 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. 

Miro Parizek, founder, Hampleton Partners, says: “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. 

The largest disclosed deals of H2 2019 – all private equity buyers – are: 

• Francisco Partners/Evergreen Coast Capital’s acquisition of LogMeIn Inc – USD4.2 billion.
• Thoma Bravo acquisition of Instructure Inc – USD1.8 billion.
• Platinum Equity acquisition of Cision Ltd – USD1.5 billion.