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Sector Report: Software Q4 2019

EXECUTIVE SUMMARY

  • The global software sector remains one of the most active sectors, with ~$63Bn in financing deal value and ~$110Bn in M&A deal value during 2019
    • 848 financings, 16% higher than 2018
    • 1,453 M&A transactions, 5% higher than 2018
  • Significant M&A activity in Q4 includes major acquisitions in the cybersecurity sector: Thoma Bravo’s $3.8Bn acquisition of Sophos and F5 Network’s $1.0Bn acquisition of Shape Security
  • Financial Software had some of the largest financing deals in Q4 ‘19 led by the $1.7Bn financing of Paytm and $500MM financing of Chime; the Business Intelligence & Analytics sector saw high financing volume
  • Software sector trading performance remained healthy, as the IGV tech-software index outperformed the S&P 500 by 7.2% in 2019
    • Sales & Marketing software index grew 49.7% LTM, outperforming all other software sub segments
  • Technical Application software companies traded at 9.7x and 28.7x for 2019 Revenue and EBITDA, respectively, among the highest in software
  • Momentum and growth rates remain healthy with the Business Intelligence & Analytics subsector leading 2019E/2018A revenue growth at 31.0%
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