Solganick & Co. Issues Software M&A Update for Q1 2017

June 28, 2017 – Solganick & Co. has issued its latest Software M&A Update for Q1 2017.  You can download a full copy here: Solganick Software M&A Update Q1 2017

Software dominated overall technology deal value and volumes during Q1. The transaction volume increased 16 percent over the past three months, from 456 to 528.

Traditional technology corporates and non-digital businesses striving to maintain relevance through acquisition of emerging technologies.

Strategic acquirers completed seven of the top ten highest value software deals in Q1 2017. Intel Corporation acquired Mobileye with the deal value of $15.3 billion and a revenue multiple of 41.6x, which is the most influential deal of the software industry in Q1.

While normally a slow period for technology M&A as companies digest & integrate acquisitions performed in the end of the year, Q1 2017 started off strong with both volumes and values surpassing levels seen since 2014. Q1 2017 dealmakers continued to focus on Software acquisitions, with buyers representing traditional technology corporates and non-digital businesses striving to maintain relevance through the acquisition of emerging technologies. The 2% increase in total deal value from the 1st quarter of 2016 was inflated by Intel’s blockbuster acquisition of Mobileye for over $15.4B, representing the first and only megadeal thus far in 2017.

The Mobileye acquisition follows several related transactions in 2016 by high profile acquirers such as Uber’s acquisition of Otto for $680 million and General Motors’ acquisition of Cruise Automation for $581 million. This continuous fever of big companies over the automatic driving indicates the high potential of this specific industry and the related market of integration and interaction between software and hardware.

Software deals have traditionally dominated U.S. tech deals. Over the past five years, from 2013-2017, software deals dominated the category of large and mid-size U.S. technology deals ($100 million – $10 billion), announcing $229.1 billion in deals.

 

Outlook for the Rest of 2017

The impact of 2016 electoral and referendum outcomes, in addition to a number of key global elections and administration changes slated for 2017, are likely to contribute to regulatory uncertainty. No one really knows what’s coming but bulking up bolsters survival chances. With ongoing modest GDP growth expected, companies will look externally for opportunities to complement organic growth, benefiting from their experience navigating 2016’s uncertain market conditions.

The technology industry, which has been one of the most active sectors, should also continue seeing high M&A rates, with continued investment from non-digital buyers, renewed interest from foreign investors and a potential M&A spree from technology giants if cash repatriation via tax reform comes to fruition. Internet, tech-enabled services, financial technology and healthcare IT will all experience more consolidation.

You can download a full copy here: Solganick Software M&A Update Q1 2017

Solganick & Co. provides investment banking and M&A advisory services to fast growing and established software companies. For more information, please contact us.

 

 

Posted in Quarterly Update, Sector Analysis, Software M&A.