September 2, 2024 – The software mergers and acquisitions (M&A) marketplace has been bustling with activity in the first half of 2024, reflecting the sector’s robust growth and strategic consolidations. The Software-as-a-Service (SaaS) vertical, in particular, has seen significant traction, driven by enterprises’ increasing reliance on cloud and AI-based and solutions. According to recent reports, global end-user spending on SaaS applications is projected to reach $247 billion in 2024, with expectations to more than triple by 2028. This surge underscores the sector’s historical expansion and the growing appetite for technological advancements.

So far in 2024, several high-profile transactions set the tone for the year. Notably one of the largest software deals announced, Synopsys announced its proposed $32.5 billion acquisition of Ansys, a move aimed at bolstering its software capabilities and expanding its market footprint. This deal is part of a broader trend where companies are leveraging M&A to enhance their technological prowess and product offerings. 

The Top Software M&A Transactions Announced so far in 2024 include:

• January 2024: Synopsys announced a $31.9 billion acquisition of Ansys, a leading provider of engineering simulation software.
• January 2024: Hewlett Packard Enterprise announced a $14 billion acquisition of Juniper Networks, a networking products and services company.  The acquisition sets up a battle for network supremacy in the AI era between HPE Aruba Networking and market leader Cisco Systems.

• February 2024: As part of the aftershocks of Broadcom’s $69 billion acquisition of virtualization giant VMware in 2023, private equity firm KKR announced a deal to buy VMware’s End User Computing business for approximately $4 billion. Broadcom had said it would find a new home for VMware’s EUC division, which covers VMWare’s VDI solutions when it closed the VMware acquisition in November. Since then it has ordered solution providers to parse out deals for the End User Computing products, including Workspace ONE and Horizon, separately from VMware’s other cloud products.

• March 2024: Cisco Systems completed a $28 billion acquisition of Splunk in a move to combine the two companies’ cybersecurity and observability strengths and create what company executives described as a distinctive, AI-powered data platform.

• March 2024: Clearlake Capital Group and Insight Partners complete the Acquisition of data analytics software firm Alteryx for $4.4B (announced December 2023). 
• April 2024: PE firm Advent International completed a $6.3 billion buyout of Nuvei.
• April 2024: IBM announced it had acquired HashiCorp, developer of the Terraform “infrastructure-as-code” platform, in a $35-per-share cash deal valued at $6.4 billion.

• April 2024: Thoma Bravo announced that it had acquired Darktrace, a pioneer of cybersecurity AI technology, for approximately $5.3 billion. Darktrace was founded in 2013 with the idea that AI and machine learning could be used to improve the detection of cyberattacks. The company went public in 2021 but was reportedly in acquisition talks with Thoma Bravo as early as 2022. Thoma Bravo has been an active acquirer of cybersecurity companies in recent years with a portfolio that currently includes Proofpoint, Sophos and SailPoint, in addition to holding stakes in a number of other security vendors.

• May 2024: OpenText completed the divestiture of the mainframe software and application modernization and connectivity (AMC) business to Rocket Software, a Bain Capital portfolio company, for $2.275 billion. Rocket Software, based in Waltham, Mass., provides IT modernization and IT automation services.
• June 2024: TPG and CDPQ acquires Aareon for $4.2 billion, a trusted provider of SaaS solutions for the property industry, leading the charge toward a digital future. With its Property Management System, Aareon promotes efficient and sustainable property management and maintenance. The company’s portfolio enables seamless, automated end-to-end processes connecting property managers and owners across the residential and commercial real estate sectors. The transaction and partnership with TPG will provide Aareon access to additional, dedicated resources and expertise to drive innovation and further growth. TPG, a leading global alternative asset management firm, will invest in Aareon with CDPQ, a global investment group, who will co-invest alongside TPG for a minority interest in Aareon.
• June 2024: Software PE firm Vista Equity Partners acquired Model N, a leader in revenue optimization and compliance software and solutions for pharmaceutical, medtech, and high-tech innovators,  for $30.00 per share in cash in a transaction that values the Company at approximately $1.25 billion.

The momentum continued into Q2 2024, with M&A deal volume rising by 36% compared to Q2 2023 and by 7% from the previous quarter. The average deal size also remained significantly higher than pre-2022 levels, reflecting the strategic importance of these acquisitions. Private strategic deals were particularly prominent, as companies sought to strengthen their competitive edge through targeted acquisitions. 

The software sector’s M&A activity is not just about large-scale transactions; smaller, strategic acquisitions are also playing a crucial role, including in the artificial intelligence sector.

Some of this year’s AI technology-driven acquisition deals that weren’t big enough to make this Top 10 list, for example, included SAP’s $1.5 billion deal to buy WalkMe to boost its Joule AI copilot software; Nvidia’s $700 million acquisition of AI infrastructure management startup Run.ai; and AMD’s move to acquire large language model developer Silo AI for approximately $665 million. And DocuSign’s acquisition of AI-powered agreement software firm Lexion for $165 million.

These acquisitions are part of a broader strategy to integrate complementary technologies thereby providing more comprehensive solutions to clients.

Looking ahead, the software M&A landscape is expected to remain vibrant, driven by the continuous evolution of technology and the need for companies to stay competitive. The positive trend observed in the first half of 2024 is likely to continue, with more companies exploring M&A as a strategic tool for growth and innovation. As the market evolves, we can expect to see more high-value transactions and strategic consolidations, further shaping the future of the software industry.

In conclusion, the software M&A marketplace in 2024 has been characterized by significant growth, strategic acquisitions, and a focus on enhancing technological capabilities. With the sector poised for continued expansion, the coming months promise to bring more exciting developments and opportunities for companies looking to leverage M&A for competitive advantage.

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