GCA Software Sector Report Q1 2020

GCA is pleased to provide you with the Q1 2020 edition of our Software Sector Report.
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The GCA Software Sector Report is tailored to the needs of busy executives and investors seeking a comprehensive overview of the M&A and valuation landscape, trend analyses and insights into the current transaction environment.

Key developments in Q1 were:

  • The global software sector remains one of the most active investment sectors, with ~$14Bn in financing deal value and ~$28Bn in M&A deal value during Q1 2020
  • 211 financings, 5% higher than Q1 ‘19
  • 389 M&A transactions, 8% higher than Q1 ‘19
  • Significant M&A activity in Q1 includes major acquisitions in the cybersecurity sector: Symphony Technology Group’s $2.1Bn acquisition of RSA, Advent International’s $1.9Bn acquisition of Forescout Technologies, and Hellman & Friedman’s $1.2Bn acquisition of Checkmarx
  • Financial Software had some of the largest financing deals in Q1 ‘20 led by the $700MM financing of Chime and $500MM financing of Revolut; the Business Intelligence & Analytics sector also saw high financing volume
  • Software sector trading performance has experienced turmoil due to the effect of COVID-19 but performed better than the S&P 500, with the IGV tech software index outperforming the S&P 500 by 8.3% LTM as of Q1 2020
  • Infrastructure software index grew 42.9% LTM as of Q1 2020, outperforming all other software sub segments
  • Technical Application software companies traded at 7.7x and 23.9x for 2020E Revenue and EBITDA, respectively, among the highest in software

Overall outlook in software growth remains healthy despite continued uncertainty, with some sectors seeing decline

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