Berkery Noyes Software Industry M&A Report For First Quarter 2016

Berkery Noyes has released its Q1 2016 mergers and acquisitionstrend report for the Software Industry. The report analyzes M&A activity in the Software Industry during Q1 2016 and compares it with the past four quarters.
 

Transaction volume experienced a seven percent gain over the past three months, with a total of 523 deals in Q1 2016. Overall value fell 81 percent, from $111.5 billion to $21.6 billion. There were four transactions in Q4 2015 with a combined value of approximately $86 billion. This included Dell’s announced acquisition of EMC Corporation for $67.5 billion. If these four deals are excluded, value decreased 15 percent from Q4 2015 to Q1 2016. Aggregate value also declined nine percent on a year-over-year basis. The number of deals throughout the past five quarters reached its peak in Q3 2015, whereas value reached its zenith in Q4 2015.

Strategic acquirers completed eight of the top ten highest value software deals in Q1 2016. The industry’s largest transaction year-to-date was Cisco Systems’ acquisition of Jasper Technologies, an Internet of Things (IoT) service platform, for $1.4 billion. This followed Cisco’s IoT related acquisition of ParStream in Q3 2015. The Jasper acquisition was one of the highest value IoT deals ever completed in this nascent marketplace. In terms of active industry acquirers, Cisco completed two other software transactions in Q1 2016 with the announced acquisition of CliQr, a provider of application-defined cloud management solutions, for $260 million; and Synata, an enterprise cloud search engine.

Deal volume in the “Niche Software” segment, which is targeted to specific vertical markets, increased six percent in Q1 2016. Niche Software was the best represented segment in the top ten list of highest value transactions with eight deals. Three of these eight acquisitions occurred in the Healthcare vertical.

Along these lines were GI Partners’ announced acquisition of Netsmart Technologies, a provider of electronic health records, patient management, billing and other solutions for the health and human services sector, which is being acquired in a joint venture with Allscripts, for $950 million; ResMed’s announced acquisition of Brightree, a cloud-based software company that serves the post-acute care sector, for $800 million; and Wipro’s announced acquisition of HealthPlan Services, a technology and Business Process as a Service (BPaaS) provider that serves the U.S. health insurance sector, for $460 million.

Consumer Software M&A activity improved 22 percent in Q1 2016, the segment’s third consecutive quarterly rise. The Business Software segment, which consists of software designed for general business practices and not specific industry markets, saw an 18 percent increase in volume throughout the past three months.

Deal volume in the Infrastructure Software segment declined 21 percent in Q1 2016, which marked a return to its Q3 2015 level. The largest Infrastructure transaction during the quarter was Micro Focus’ announced acquisition of Serena Software, which specializes in application lifecycle management (ALM) software, for $540 million.

Other high value Infrastructure deals were Microsoft Corporation’s announced acquisition of Xamarin, which develops software solutions for mobile application development, with a reported purchase price between $400 and $500 million; and Oracle’s announced acquisition of Ravello, a provider of cloud-based virtualization software solutions, with a reported purchase price between $400 and $450 million. As for the cyber-security sector, notable deals included FireEye’s acquisitions of iSIGHT Partners for $200 million and Invotas International Corporation; and IBM with the acquisition of Resilient Systems.

Berkery Noyes Releases Software Industry M&A Report For First Quarter 2016

Monday, April 04, 2016

NEW YORK — April 4, 2016 — Berkery Noyes, an independent mid-market investment bank, today released its Q1 2016 mergers and acquisitions trend report for the Software Industry. The report analyzes M&A activity in the Software Industry during Q1 2016 and compares it with the past four quarters.
Transaction volume experienced a seven percent gain over the past three months, with a total of 523 deals in Q1 2016. Overall value fell 81 percent, from $111.5 billion to $21.6 billion. There were four transactions in Q4 2015 with a combined value of approximately $86 billion. This included Dell’s announced acquisition of EMC Corporation for $67.5 billion. If these four deals are excluded, value decreased 15 percent from Q4 2015 to Q1 2016. Aggregate value also declined nine percent on a year-over-year basis. The number of deals throughout the past five quarters reached its peak in Q3 2015, whereas value reached its zenith in Q4 2015.
Strategic acquirers completed eight of the top ten highest value software deals in Q1 2016. The industry’s largest transaction year-to-date was Cisco Systems’ acquisition of Jasper Technologies, an Internet of Things (IoT) service platform, for $1.4 billion. This followed Cisco’s IoT related acquisition of ParStream in Q3 2015. The Jasper acquisition was one of the highest value IoT deals ever completed in this nascent marketplace. In terms of active industry acquirers, Cisco completed two other software transactions in Q1 2016 with the announced acquisition of CliQr, a provider of application-defined cloud management solutions, for $260 million; and Synata, an enterprise cloud search engine.
Deal volume in the “Niche Software” segment, which is targeted to specific vertical markets, increased six percent in Q1 2016. Niche Software was the best represented segment in the top ten list of highest value transactions with eight deals. Three of these eight acquisitions occurred in the Healthcare vertical.
Along these lines were GI Partners’ announced acquisition of Netsmart Technologies, a provider of electronic health records, patient management, billing and other solutions for the health and human services sector, which is being acquired in a joint venture with Allscripts, for $950 million; ResMed’s announced acquisition of Brightree, a cloud-based software company that serves the post-acute care sector, for $800 million; and Wipro’s announced acquisition of HealthPlan Services, a technology and Business Process as a Service (BPaaS) provider that serves the U.S. health insurance sector, for $460 million.
Consumer Software M&A activity improved 22 percent in Q1 2016, the segment’s third consecutive quarterly rise. The Business Software segment, which consists of software designed for general business practices and not specific industry markets, saw an 18 percent increase in volume throughout the past three months.
Deal volume in the Infrastructure Software segment declined 21 percent in Q1 2016, which marked a return to its Q3 2015 level. The largest Infrastructure transaction during the quarter was Micro Focus’ announced acquisition of Serena Software, which specializes in application lifecycle management (ALM) software, for $540 million.
Other high value Infrastructure deals were Microsoft Corporation’s announced acquisition of Xamarin, which develops software solutions for mobile application development, with a reported purchase price between $400 and $500 million; and Oracle’s announced acquisition of Ravello, a provider of cloud-based virtualization software solutions, with a reported purchase price between $400 and $450 million. As for the cyber-security sector, notable deals included FireEye’s acquisitions of iSIGHT Partners for $200 million and Invotas International Corporation; and IBM with the acquisition of Resilient Systems.

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