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Enterprise software M&A rides ‘post-pandemic’ wave with 751 Deals and record USD124bn in transactions, says new report

The latest Enterprise Software M&A report from Hampleton Partners, the international technology mergers and acquisitions advisor, reveals that with 751 deals signed and a record USD124 billion in transaction value achieved in the first six months of 2021, the sector is riding a ‘post-pandemic’ wave of activity.

During the height of the covid-driven boom in Enterprise Software M&A during H2 2020, a record 836 deals and USD112 billion in valuations were recorded, as companies quickly set their teams up for dedicated remote-working.
As new, post-covid habits have settled, M&A activity In the Enterprise Software sector has demonstrated strong growth in comparison with pre-pandemic levels.
Miro Parizek, founder and principal partner, Hampleton Partners, says: “Now, the situation is more complex, with many workers returning to a more flexible, hybrid office setup. After initial investment in virtualisation and digitalisation, there is a critical need for companies to ensure their teams have smooth, uninterrupted access to their technology and platforms, no matter where they are working from.
“That could mean investing more in cloud integration, collaboration and virtualisation tools, or better enterprise resource planning technology that can cope with the needs and demands of a hybrid workforce.”
The revenue multiples achieved have grown at a phenomenal rate, reaching 4.7x in 1H2021 up from 3.4x in H2 2020.
This half-year also saw some extremely high multiples paid out, such as the 93.2x EBITDA multiple paid by Optum Health for Change Healthcare, a provider of revenue cycle management, data analytics, imaging solutions, artificial intelligence capabilities and patient engagement solutions for providers and payers
There has been a clear, increasing trend in the share of private equity-led deals in the Enterprise Software sector. In the first half of 2021, private equity buyers made up 44 per cent of all deals – the highest share of deals on record.
In line with the previous period, private equity buyers continue to target technologies that are increasingly relevant after the pandemic: for instance, in the education management and e-learning software verticals, every target was bought by a financial buyer.
Parizek says: “Companies are adjusting their M&A strategy to focus more on a target’s business resilience, digital technology alignment, and to gain market share through consolidation. M&A activity is becoming a crucial lever for growth as the rate of organic growth decelerates for many tech companies in the future.
“Meanwhile, even non-tech companies are continuing to acquire capabilities in software, IT services and internet commerce verticals to digitise offerings, while private equity players are placing big bets on securing applications as well as risk and compliance.”
Hampleton’s Enterprise Software M&A Report analyses transactions, trends and activity across the Business Intelligence & Customer Analytics; Design, Testing & Simulation; Enterprise Applications; Information Management; Infrastructure Management and Vertical Applications segments of the sector.

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