News and Research

Software M&A Update, Q3 2021

Software M&A Update, Q3 2021 - Solganick & Co.

January 4, 2022 – Solganick & Co. has issued its latest Software M&A Update for Q3 2021.

Quick Answer

Software M&A activity remained exceptionally strong in Q3 2021, posting a record 884 transactions and reaching a cumulative transaction value of $62.8 billion. This volume significantly surpassed previous quarterly highs, with the top four M&A transactions alone constituting approximately 50% of the total value. Both strategic acquirers and private equity firms, notably Thoma Bravo, were highly active, demonstrating sustained interest in resilient SaaS-based business models and communications/connectivity-focused companies.

The following provides a summary of the report:

With impressive Q1 and Q2, software M&A activity remains strong in Q3 2021.

Aggregate software industry M&A volume continues to reach new heights, as the third quarter of 2021 posted a record 884 transactions. For context, until late 2020, aggregate software industry deal volume had yet to eclipse 700 transactions in the past five quarters.

Top 4 M&A transactions in the third quarter constituted ~50% of the cumulative transaction value of the total 884 transactions reporting $62.8 billion

  • Intuit’s $12.0 billion acquisition of The Rocket Science Group
  • NortonLifeLock’s $8.0 billion acquisition of Avast
  • Thoma Bravo’s $7.0 billion acquisition of Medallia
  • Clearlake Capital’s $4.9 billion acquisition of Cornerstone

Certain subsectors are particularly well-positioned to succeed in 2022 and post-pandemic including:

Communications and connectivity-focused companies have benefitted from the sudden shift to remote work and education, a trend that is anticipated to persist longer-term given widespread adoption.

SaaS-based business models are continuing to be highly resilient and sought-after.

Notable software transactions included:

  • Hexagon’s $2.7 billion acquisition of Global Enterprise Asset Management (EAM) Business of Infor
  • Moody’s $1.9 billion acquisition of Risk Management Solutions
  • Pegasus Corp One’s $1.9 billion acquisition of Mailgun Technologies
  • Equifax Workforce Solutions’ $1.8 billion acquisition of Appriss
  • Vista Equity Partners’ $1.5 billion acquisition of Blue Prism

IPO and financing activity during the quarter was extremely robust

Krafton, Robinhood Markets and Zomato entered the public marketplace with over $60 billion in combined market capitalization

The most active private equity investor was Thoma Bravo

You can download the complete report here: Software M&A Update Report Q3 2021

About Solganick & Co.

Solganick & Co. is a data-driven investment bank and M&A advisory firm focused exclusively on the software and tech-enabled services industry sectors. For more information on the firm’s software M&A practice, go here: Software

To inquire about a software M&A transaction, please email us: [email protected]

Frequently Asked Questions

1 How do the Q3 2021 software M&A trends and valuations discussed in this report provide insights for my company's potential exit?

The report details aggregate software industry M&A volume and transaction values, including top deals and active subsectors. This data offers a snapshot of the market's health and can help inform preliminary discussions around valuation and strategic positioning for software and tech-enabled services companies considering an M&A event.

2 Which types of buyers were most active in the software M&A market during Q3 2021, and what does this signify for sellers?

Q3 2021 saw significant activity from both strategic acquirers, such as Intuit and NortonLifeLock, and private equity firms like Thoma Bravo and Clearlake Capital. Thoma Bravo was specifically noted as the most active private equity investor, indicating strong and sustained interest from financial sponsors in the software sector.

3 What specific software subsectors were identified as having strong M&A potential in Q3 2021 and looking ahead to 2022?

The report highlights communications and connectivity-focused companies, which benefited from the shift to remote work, and resilient SaaS-based business models as particularly well-positioned for M&A success in 2022 and beyond. These areas are anticipated to continue their strong performance.

4 What was the overall volume and value of software M&A transactions in Q3 2021?

The software M&A market experienced a record-breaking Q3 2021, with 884 transactions. The top four deals alone accounted for approximately 50% of the cumulative transaction value, totaling $62.8 billion, demonstrating robust activity and significant capital deployment in the sector.