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Berkery Noyes Releases 2009 Software Industry Merger & Acquisition Trends - Rise of the Multiples

Thursday, February 04, 2010

Software Industry M&A activity experienced a significant half-to-half gain as exhibited by the 83% increase in the median EV/revenue multiple from 1.2 in 1st Half 2009 to 2.2 in 2nd Half 2009. This rise brings the median EV/revenue multiple back to its 2007 level.2nd Half 2009 exhibited a moderate increase in both aggregate volume and aggregate value, versus 1st Half 2009. Half-to-half, aggregate value increased by 17% from approximately $18 billion to $21 billion, and aggregate volume increased by 5% from 341 deals to 358.

Year-to-year 2009 exhibited negative growth in both aggregate value and aggregate volume of transactions. Total transaction volume declined by 16% from 837 deals in 2008 to 699 in 2009. Aggregate value declined by 16% as well, from $45.43 billion in 2008 to $38.30 in 2009. Financially sponsored acquisitions took a decreased market share of deal activity, as measured by aggregate value, having had 23% in 2008 and 14% in 2009, a decrease of 37%.

The largest transaction in the Software Industry was Oracle's proposed acquisition of Sun Microsystems, announced April 19, for $7.1 billion. The aforementioned transaction is more than 2.4x the next largest transaction, Fidelity National Information Services' acquisition of Metavante for $2.9 billion, which closed on October 1.

Please note that for evaluating aggregate transaction values, value represents total consideration paid by acquirer. For multiples Berkery Noyes uses enterprise values (EV) that normalize values where less than 100% of a company is being acquired or has net debt.