News and Research

Software M&A Update

Software mergers and acquisitions update

January 12, 2024


State of Software Mergers and Acquisitions (M&A) in 2023 and 2024 Outlook


Overview of 2023

The landscape of software mergers and acquisitions in 2023 was marked by significant deals despite economic uncertainties and increased regulatory scrutiny. The year saw Cisco’s $28 billion acquisition of Splunk, standing out as the largest enterprise software deal. Contrastingly, Broadcom’s $69 billion acquisition of VMware, initiated in the previous year, finally secured regulatory approval. This mixed environment of high-value deals and increased regulatory oversight was indicative of a broader trend in the tech industry.

Regulatory bodies in the US and Europe exhibited a more assertive stance towards big tech acquisitions, affecting the timelines and feasibility of such deals. For example, Broadcom’s VMware acquisition spanned 59 weeks and crossed fiscal years due to regulatory hurdles. Similarly, Microsoft’s acquisition of Activision Blizzard faced ongoing resistance from the FTC, highlighting the regulatory challenges in the tech sector.

Gartner predicts that this stringent regulatory environment will likely dampen the appetite for large M&A deals in 2024, potentially steering companies towards multiple smaller acquisitions. The economic uncertainty is concurrently lowering the valuations of small tech startups, making them more attractive acquisition targets. Gartner foresees an increase in “techquisitions,” especially in the AI sector, as companies seek to bolster their technological capabilities through acquisitions.


Key Trends and Predictions for 2024

For 2024, the trend is expected to lean towards smaller, more strategic acquisitions with a focus on innovative technologies like AI. Willis Towers Watson (WTW) noted that it anticipates that the success of these deals will hinge on the acquirer’s ability to foster a culture of innovation and effectively utilize AI to enhance employee experiences. The role of AI is twofold – as both an acquisition target and a facilitator in the M&A process, aiding in the analysis and negotiation of agreements.

CIOs are advised to stay abreast of M&A activities, as these can significantly impact IT strategies and operations, from disrupting strategic rollouts to offering new opportunities for leveraging synergized systems. The M&A landscape is not just a business matter but a bellwether of broader shifts in the IT domain.


Top 10 Software M&A Transactions in 2023

  1. Cisco’s Acquisition of Splunk: Cisco made a significant move with a $28 billion offer for Splunk, a notable enterprise cloud protection company. This deal represented the largest enterprise software deal of 2023.
  2. Broadcom’s Acquisition of VMware: This was a landmark deal with Broadcom acquiring VMware for $69 billion. This acquisition faced extensive regulatory scrutiny before finally receiving approval.
  3. Two PE Firms Buy Alteryx: Alteryx, an analytics cloud platform, agreed to be acquired by Clearlake Capital and Insight Partners in a deal valued at $4.4 billion.
  4. IBM Buys Software AG‘s Integration Platforms: IBM agreed to buy StreamSets and webMethods, integration-platform-as-a-service enterprise technology platforms from Software AG, for $2.13 billion.
  5. Salesforce Buys Spiff: Salesforce’s acquisition of Spiff, a developer of software for tracking sales commissions, is aimed at enhancing its Sales Cloud platform. The financial details of this transaction were not publicly disclosed.
  6. ServiceNow’s Acquisition of UltimateSuite: ServiceNow acquired UltimateSuite, a task mining software company. The financial terms of this deal were not disclosed, but it was a strategic move to expand the process mining capabilities of ServiceNow’s Now Platform.
  7. SilverLake Buys Qualtrix: Silver Lake’s all-cash acquisition, which was first announced in March 2023 and valued at $12.5 billion.
  8. OpenText Buys MicroFocus: a leading provider of mission-critical software technology and services that help customers accelerate digital transformation.The  purchase price was approximately $5.8 billion.
  9. Nintex Buys Skuid: Process intelligence and automation specialist Nintex agreed to buy Skuid, a developer of a low-code tool. The acquisition’s financial terms were not revealed.
  10. Microsoft’s Bid for Activision Blizzard: The U.S. Federal Trade Commission’s ongoing challenge against Microsoft’s $68.7 billion bid for Activision Blizzard is a significant case reflecting the regulatory hurdles in major tech acquisitions.


Outlook for 2024

Looking forward to 2024, the M&A landscape in the software industry is likely to be shaped by economic conditions, regulatory environments, and technological advancements. The focus might shift from blockbuster deals to smaller, more strategic acquisitions, particularly in emerging tech sectors like AI and cloud services. Companies will need to navigate a complex mix of opportunities and challenges, balancing innovation with regulatory compliance and economic realities.

Solganick & Co. expects the software M&A market to show renewed strength as compared to 2023. We expect increased M&A deal volume and slightly higher valuations to occur for software transactions this year.

For more information on the Software industry or to inquire about an M&A transaction, please contact us.