Legacy vendors and private equity intensify their mergers and acquisitions efforts as the industry moves to SaaS and the Cloud
The deal volume during 2H 2016 was down but the revenue multiple has increased over the last 30-month period, coming out at 3.5x during 2H 2016.
Out of 2303 transactions in the trailing 30-month period, activity in the enterprise applications and networking segment accounted for the majority of deals, amounting to 63 per cent of the total number. The report also shows rising interest and larger deal values, particularly in segments such as artificial intelligence, security and enterprise collaboration.
Private equity firm Vista Equity Partners and cloud and digital services company, j2 Global, topped the table as top acquirers, announcing 13 deals each.
Just shy of the top position were Salesforce and Microsoft, closing 12 transactions each. Other active investors included private equity group Marlin Equity Partners, Oracle and Google, with ten acquisitions each.
Cloud momentum grows
As the profitability of traditional enterprise software providers continues to tumble, legacy players are targeting cloud investments that enable them to better compete with technology rivals such as Microsoft and Google.
Landmark deals included Oracle’s $9.3 billion purchase of Netsuite. The transaction was valued at a 19 per cent premium and marked Oracle’s largest ever Cloud-focused acquisition.
Miro Parizek, principal partner, Hampleton Partners, says: “The accelerating pace in the transition to Cloud and SaaS among legacy vendors such as Oracle and SAP continues to drive enterprise M&A. As large vendors with strong balance sheets push the momentum further, smaller players providing new avenues for growth will become increasingly target for acquisition.”
About the research
The 8th bi-annual “Hampleton Partners SaaS and Cloud M&A Research Report, 2H 2016” covers the period from July 2014 – December 2016, using data from 451 research. Hampleton’s research reports cover the following industries: Automotive Technology, Digital Marketing, e-Commerce, Enterprise Software, Internet of Things, IT Services and Outsourcing, SaaS and Cloud Services and Fintech.
Download full reports here: www.Hampletonpartners.com/research
About Hampleton Partners
We are a London-based M&A advisory firm, serving the owners and shareholders of technology companies. With offices in the US and Europe, and associates in Asia, Hampleton combines international reach with local resources to provide the very best in M&A and corporate finance services. The Hampleton team boasts an invaluable combination of deal making expertise, operational experience, deep industry knowledge and an extensive network of contacts.