Berkery Noyes Releases Software Industry M&A Report For Full Year 2013
NEW YORK, Jan. 7, 2014
NEW YORK, Jan. 7, 2014 /PRNewswire/ --Berkery Noyes, an independent
mid-market investment bank, today released its full year 2013 mergers and
acquisitions trend report for the Software Industry. The report analyzes M&A
activity in the Software Industry during 2013 and compares it with data
covering 2011 and 2012.
Deal volume experienced a two percent uptick, with a total of 1,598
transactions in 2013. Aggregate value rose 31 percent, from $67.23 billion to
$88.22 billion. The median revenue multiple increased from 2.1x to 2.4x, while
the median EBITDA multiple moved slightly from 11.3x to 11.5x.
Transaction activity in the "Niche Software" segment, which is targeted to
specific vertical markets, remained about constant. Five of the industry's top
ten highest value deals occurred in the Niche Software segment. In addition,
four of these five acquisitions were located in the finance vertical. One
notable transaction was NCR's acquisition of Digital Insight, a provider of
banking software, which was acquired from Thoma Bravo for $1.65 billion.
Approximately four months prior to this, Thoma Bravo acquired Digital Insight
from Intuit for $1.03 billion.
Digital Insight was one of several finance related acquisitions completed by
NCR during the year. NCR also acquired Alaric Systems, a provider of fraud
protection software that serves financial institutions, for $78 million. With
the acquisitions of Digital Insight and Alaric Systems, NCR is positioning
itself as a leader in the retail banking market.
As for the Infrastructure Software segment, deal volume rose four percent
between 2012 and 2013. The segment's most active acquirers in 2013, either
directly or through an affiliated business, were EMC Corporation and Intel
Corporation with six transactions each. EMC acquired Desktone, PassBan,
ScaleIO, Aveksa, Adaptivity, and Virsto Software. The largest of EMC's
transactions was the acquisition of Virsto Software, which EMC acquired
through its subsidiary VMware, for $184 million. Meanwhile, Intel acquired
Omek Interactive, Stonesoft, Aepona Group, Mashery, and the HTML5 development
tools division from AppMobi. The largest of Intel's transactions was the
acquisition of Stonesoft, which Intel acquired through its subsidiary McAfee,
for $369 million. When examined over the three years covered in the report,
EMC was the segment's most active acquirer with 25 transactions.
Also of note, there were six deals in the segment's cyber and information
security subset during 2013 that were above $100 million in value. Activity in
the subset was driven in part by an interest in cloud-based solutions that
protect against Distributed Denial of Service (DDoS) attacks, a notion
highlighted by transactions such as Akamai Technologies' acquisition of
Prolexic Technologies for $370 million.
Regarding other areas covered in the report, the Business Software segment
underwent a three percent increase in volume on a year-to-year basis. The
largest financially sponsored deal in the segment was Advent International's
announced acquisition of Unit4 in the enterprise resource planning (ERP)
subsector. This transaction, with a purchase price of $1.71 billion,
represented a 2.7x revenue multiple and 18.5x EBITDA multiple. At the same
time, transaction volume in the Consumer Software segment improved ten
percent. Consumer Software was also the industry's fastest growing segment
over the past twelve months.
"After getting off to a somewhat slow start, software M&A activity began to
gain momentum during the latter part of 2013," said James Berkery, Chief
Information Officer at Berkery Noyes. "Moreover, the annual rise in aggregate
value was mainly driven by deals that took place throughout the second half of
the year. This is when seven of the industry's top ten largest transactions
occurred." Berkery continued, "In terms of deal activity, some companies are
deciding to divest non-core assets as they re-evaluate their market position.
Many of these assets are strong businesses in their own right, which is
drawing the attention of acquirers."
A copy of the SOFTWARE INDUSTRY M&A REPORT FOR FULL YEAR 2013 is available at
the Berkery Noyes website.
About Berkery Noyes
Berkery Noyes is an independent investment banking advisory firm servicing the
information industry. The firm specializes in mergers and acquisitions
advisory, debt and equity financing, and financial consulting services for
companies in the $10 million to $500 million range. Since its founding by
Joseph W. Berkery in 1983, Berkery Noyes has worked with corporate clients to
grow through acquisition, divest non-core assets, and maximize shareholder
returns through strategic transactions and restructurings. For private owners,
Berkery Noyes helps create liquidity and execute timely exit strategies that
achieve their personal and professional objectives. The firm's research teams
publish acquisition activity in the respective sectors they follow on
Securities services are offered through Berkery Noyes Securities, LLC. For
more information, visit www.berkerynoyes.com.
SOURCE Berkery Noyes
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