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Insights

In Q4 2020, M&A deal activity and overall M&A deal value continued its aggressive growth, and private financing activity grew at an accelerating pace. Investors continue to show a strong desire for software business models amidst greater cloud adoption and remote work environments, evidenced by another quarter of favorable performances in public markets

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Sector Report: Software Q4 2020

EXECUTIVE SUMMARY

  • In Q4 2020, M&A deal activity and overall M&A deal value continued its aggressive growth, and private financing activity grew at an accelerating pace. Investors continue to show a strong desire for software business models amidst greater cloud adoption and remote work environments, evidenced by another quarter of favorable performances in public markets
    • Software sector performed well in Q4 with the IGV tech-software index outperforming the S&P 500 by 35.7%LTMas of Q4 2020
    • Infrastructure software index grew 118.7%LTM as of Q4 2020, outperforming all other software sub segments
  • Q4 ’20 saw ~$22Bn in financing deal value and ~$76Bn in M&A deal value
    • 284financings, 25.1%higher than Q4 ‘19
    • 532M&A transactions, 52.4% higher than Q4 ’19
  • Significant M&A activity in Q4 includes acquisitions in the ERP & General Business sector: Salesforce’s$28.4Bnacquisition of Slack and Adobe’s $1.5Bn acquisition of Work front
  • Financial software had some of the largest financing deals in Q4 ‘20 led by the $668MM financing of Robinhood, $534MM financing of Chime and $343MM financing of Molo
  • Overall outlook in software growth remains healthy, with most sectors seeing notable growth
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