SaaS drives $71bn of deals in record six months

Written by Hannah McGrath

02/10/2019

The global market for enterprise software saw a record $71 billion of investment in the first six months of 2019, following a number of mega-deals between software giants.

Hampleton Partners highlighted the rapid acceleration of digital transformation efforts in businesses worldwide, with 651 transactions agreed in the first half of the year, led by software-as-a-service (SaaS) deals.

The record growth in the mergers and acquisitions (M&A) and other transactions was driven by a series of large acquisitions and high valuations, including multi-billion dollar deals such as Salesforce’s acquisition of Tableau’s business intelligence analytics and data visualisation business for $15.1 billion and Dassault’s acquisition of Medidata for $5.7 billion.

The first half of 2019 also saw the highest recorded share of private equity or financial holding company transactions so far, with 34 per cent of all transactions carried out by financial buyers, up from a peak of 31 per cent in 2017 and significant more than the 19 per cent recorded in 2018.

There was considerable activity from a number of major financial services players, including the top three acquirers in enterprise software over the past 30 months: Wisetech Global (22 deals); Vista Equity Partners (19 deals) and Thoma Bravo (17 deals).

Technology innovation and big data companies also proved popular with buyers. Google’s venture arm Alphabet made a $2 billion play for Looker, a provider of big data business intelligence analytics and visualisation, data modelling and discovery SaaS. Google said it would combine elements of Looker into its Google Cloud suite and allow customers to harness data to help drive their digital transformation.

There were also notable deals in the market for 3D software tools, with Alibaba’s acquisition of InfinityAR, a developer of 3D augmented reality software. Adobe also made a $105 million bet on Allegorithmic, to enable 3D and immersive workflows and tools in its Creative Cloud suite.

Miro Parizek, founder and principal partner at Hampleton Partners, said: “In spite of any economic slowdown and public market volatility, companies are sprinting towards SaaS and software targets to cover all areas of digitalisation and digital transformation.

“Although we expect the sector’s record-breaking metrics to ease away from their current peak, the sector is set to remain stable and strong over the long-term,” he continued. “The need to improve business insights and resource allocation will remain imperative for every business, and be spurred by further advances in machine learning and artificial intelligence for SaaS and cloud-based software.”