News and Research

Software M&A Update and Report for Q4 2018

February 10, 2019 – Investment bank Solganick & Co. has published its latest software M&A Update and Report for Q4 2018.  The following highlights the latest software mergers and acquisitions including valuations. You can also download the complete report here: Solganick Co Software MnA Update Report Q4 2018

Quick Answer

Solganick & Co.'s Q4 2018 report indicated a significant increase in software M&A transaction value, which rose by 205.73% to $76.71 billion, even as the total transaction volume decreased to 233 deals. During this period, the average M&A EV/Revenue multiple for software companies was 5.77X, with strategic acquirers paying an average of 7.2X EV/Revenue. Notable acquisitions included IBM's purchase of Red Hat Systems for $34 billion and Microsoft's acquisition of Github for $7.5 billion.

Q4 2018 – Software M&A Update

  • Total software M&A transaction volume in Q4 2018 was 233 compared to 265 in Q4 2017.
  • Total transaction value in Q4 2018 rose by 205.73% compared to Q4 2017, from $25.09 bn to $76.71 bn.
  • Median Deal Size in Q4 2018 was $100 mn compared to $50.5 mn in Q4 2017
  • The software industry continues to be very active:
    • Microsoft acquired Github for $7.5 bn
    • IBM acquired Red Hat Systems for $34 bn
    • Cisco acquired Duo for $2.35 bn
    • Paypal acquired Hyperwallet for $0.40 bn

Valuation Highlights:

The average M&A EV/Revenue multiple for software companies paid was 5.77X in Q4 2018.

The average M&A EV/EBITDA multiple for software companies paid was 26.92X in Q4 2018.

Strategic acquirers paid an average of 7.2X EV/Revenue multiple for software companies in Q4 2018.

Solganick & Co. provides investment banking and M&A advisory services to the global software industry sector. For more information, please contact us.

 

Frequently Asked Questions

1 What were the key valuation multiples for software M&A in Q4 2018?

In Q4 2018, the average M&A EV/Revenue multiple for software companies was 5.77X, and the average EV/EBITDA multiple was 26.92X. Strategic acquirers specifically paid an average of 7.2X EV/Revenue multiple.

2 How did software M&A transaction volume and value change in Q4 2018 compared to the previous year?

Total software M&A transaction volume in Q4 2018 was 233, a decrease from 265 in Q4 2017. However, total transaction value significantly rose by 205.73% to $76.71 billion in Q4 2018, up from $25.09 billion in Q4 2017.

3 Which major software acquisitions were highlighted in the Q4 2018 report?

The report highlighted several significant acquisitions, including Microsoft acquiring Github for $7.5 billion, IBM acquiring Red Hat Systems for $34 billion, Cisco acquiring Duo for $2.35 billion, and Paypal acquiring Hyperwallet for $0.40 billion.

4 What services does Solganick & Co. offer in the software M&A sector?

Solganick & Co. provides investment banking and M&A advisory services specifically to the global software industry sector. They published this Q4 2018 report as part of their research and updates.