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    Main | MARTIN MAGIDA TO SPEAK AT NYC TECHNOLOGY GROWTH STRATEGY FORUM »
    Monday
    Jan142019

    SOFTWARE M&A VALUE SURGES, DRIVEN BY INFRASTRUCTURE DEALS

    According to Berkery Noyes' Software report for Full Year 2018, total deal volume remained about constant on a yearly basis. Private equity backed volume improved nine percent whereas strategic volume declined four percent. Overall value rose 70 percent, from $134.63 billion to $229.54 billion. In terms of valuations, the median revenue multiple year-over-year improved from 2.3x to 3.1x, while the median EBITDA multiple saw a slight uptick from 13.3x to 13.9x. 

    The industry’s largest transaction in 2018 was IBM’s announced acquisition of Red Hat, which provides open-source software products to the enterprise community, for $32.95 billion. The Red Hat acquisition was the second largest industry deal ever tracked by Berkery Noyes, following Dell’s acquisition of EMC Corporation for $67.48 billion in 2015.

    M&A activity in the Infrastructure Software segment stayed about the same over the past year. However, the segment was responsible for four of the overall industry’s top five highest value deals in 2018. Along these lines were IBM’s previously mentioned acquisition of Red Hat for $32.96 billion; Broadcom’s announced acquisition of CA Technologies, an IT management software and solutions company, for $18.38 billion; KKR’s announced acquisition of BMC Software, which also offers cloud and IT management solutions, for $8.5 billion; and Microsoft’s announced acquisition of GitHub, which provides code hosting services that allow developers to build software for open source projects, for $7.5 billion.

    Upon examination of Infrastructure acquirers in 2018, private equity firm Thoma Bravo (either directly or through an affiliated business) was active with several acquisitions including:

    • Imperva, a cybersecurity company that offers activity monitoring and risk management solutions for critical business data and applications, for $1.81 billion;
    • Veracode, a provider of cloud-based application intelligence and security verification services, for $950 million; 
    • XaTester, which delivers automated unit testing to mainframe DevOps teams;
    • Centrify Corporation, an identity and access management platform;
    • Avecto, an endpoint privilege management and application control company;
    • LogRhythm, which offers security analytics, log management, network and endpoint monitoring; and
    • Lieberman Software, a cybersecurity business that isolates and contain data breaches.

    “Acquisition activity across the software marketplace is rooted in sound strategy as major technology companies seek greater mass and diversity, formerly emerging technologies have matured, and financial buyers look to invest in quality assets,” said James Berkery, Managing Partner at Berkery Noyes.

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