GCA Software Sector Report Q3 2020

In Q3 2020, the software sector continued to show its resiliency. M&A deal activity and overall M&A deal value witnessed a sharp rebound, and private financing activity continued at a healthy pace.
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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 Q2 were:

  • In Q3 2020, the software sector continued to show its resiliency. M&A deal activity and overall M&A deal value witnessed a sharp rebound, and private financing activity continued at a healthy pace. Investors have shown a strong desire for software business models amidst greater cloud adoption and remote work environments, evidenced by favorable performances in public markets and heavy IPO activity with subsequent pops in share price value
    • Software sector performed well in Q3 with the IGV tech-software index outperforming the S&P 500 by 34.1% LTM as of Q3 2020
    • Infrastructure software index grew 148.8% LTM as of Q3 2020, outperforming all other software subsegments
  • Q3 ’20 saw ~$18bn in financing deal value and ~$56bn in M&A deal value
    • 215 financings, 3.2% lower than Q3 ‘19
    • 469 M&A transactions, 22.1% higher than Q3 ’19
  • Significant M&A activity in Q3 includes acquisitions in the Security sector: Ivanti’s $930mm acquisition of MobileIron and Fastly’s $775mm acquisition of Signal Sciences
  • Financial software had some of the largest financing deals in Q3 ‘20 led by the $660mm financing of Robinhood and $650mm financing of Klarna; the Security sector also saw high financing volume
  • Overall outlook in software growth remains healthy, with most sectors seeing notable growth

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