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Government Software M&A Experts

An M&A Advisor that Fits the Bill

Between regulations, outdated processes, and red tape, government is a complex and intriguing industry ripe for digital transformation. SEG is an expert in M&A for the government software vertical, advising over two dozen transactions with some of the most prominent buyers in the space. Our clients span payments, education, permitting, procurement, maintenance/operations, project management, community corrections, utilities, and more for state, local, and federal governments. Our industry network, proven process, and deep understanding of this complex and highly regulated industry make us the ideal M&A partner for government software companies.

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M&A-GovTech-Trends

Technology Adoption Driving Tailwinds in Government Software M&A

The global market for government software, estimated at $18.9B for license, maintenance, and subscription revenues, is undergoing a digital transformation as governments adopt new software applications and related technology to replace legacy and manual processes.

Increased demand for accountability drives governments to evaluate solutions that can help make their processes more efficient and transparent. This is compounded by a demographic that places a greater emphasis on technology, which bleeds into government, which has historically been late to adopt.

Further, changing policies is breathing new life into the typically strict, lengthy, and outdated procurement methods of the past. Smaller vendors and new SaaS products are more enabled than ever to enter the government market. These and various other catalysts have been accelerating the public sector’s adoption of technology over the past few years. Join our newsletter and receive the latest updates on M&A industry trends.

*Note: The data below does not include public education and utilities deals.

Government Software M&A Deal Volume
2019
2020
2021
2022
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The Government Software Vertical Spans a Wide Spectrum of Technologies

Government Software Companies Are Grouped into Two Main Categories. We Detail Select Sub-Categories Below:
State-Local-Federal

State, Local & Federal Government

Software that supports government processes and services on the state, local, and federal level are included in Government software under this category. Technology is used across multiple departments to improve government visibility, accessibility, and accountability.

ERP

Enterprise Resource Planning (ERP) and Administration: Includes tools integrating various departments, such as finance, human resources, procurement, and inventory management. These tools enhance efficiency, reduce redundancy, and ensure accurate decision-making, contributing to the seamless functioning of government entities at all levels.

CommunityServices

Community Services & Engagement: Encompasses tools that facilitate civic engagement, health and human services, education, and public communication. These solutions contribute to citizen engagement, communication, and the effective management of community services, fostering collaboration between the government and the public at the state, local, and federal levels.

Infrastructure

Infrastructure & Development Management: Includes software solutions to manage physical infrastructure, land use, maintenance, zoning, permitting, public works, and transportation. These solutions contribute to efficiently managing and optimizing infrastructure projects, land use planning, and permitting processes.

Legal

Legal and Compliance Management: Includes tools designed to support government entities in navigating complex legal and regulatory landscapes. Incorporating solutions for court and case management, grant management, investigations, audits, and legal counsel, these solutions contribute to efficient case management, grant tracking, and legal compliance for government agencies.

Public-Safety

Public Safety

Government software within the Public Safety category includes software for law enforcement, fire departments, and emergency medical services.

EmergencyResponse

Emergency Response and Dispatch: Includes tools to optimize emergency response and dispatch services, providing features like Computer-Aided Dispatch (CAD) and Electronic Patient Care Record (EPCR). They enhance efficiency by minimizing response times, improving resource utilization, and ensuring coordinated responses for public safety agencies during critical situations.

InfoManagement

Records and Information Management: Encompasses tools designed to handle critical data and information within the public safety sector, including Records Management Systems (RMS) and broader data management solutions. These solutions are dedicated to maintaining, organizing, and accessing comprehensive records for law enforcement and public safety agencies.

Surveillance

Communication and Surveillance: Incorporates emergency communications and response, camera, and video, and related software and systems. These solutions focus on real-time communication, surveillance, and situational awareness to enhance operational capabilities. Whether supporting emergency communications, video management, or evidence storage, these tools contribute to the overall effectiveness of law enforcement agencies.

Workforce Management

Workforce Management and Administration: Dedicated to public safety agencies, these solutions focus on managing personnel and administrative aspects. Encompassing Scheduling, HR, and Workforce functionalities, these tools ensure efficient personnel management and administrative task handling within law enforcement and public safety organizations.

Government Software Goldmine: Investing in Solutions that Govern Success

In the dynamic realm of government software, strategic buyers and private equity investors are captivated by a compelling narrative. The sector’s allure stems from impactful factors, notably a colossal addressable market representing approximately one-third of the U.S. GDP dedicated to government spending across diverse levels. Businesses operating in government software find fertile ground in this expansive market, promising substantial growth potential. Moreover, the sector embraces an anti-cyclical play, marked by unwavering demand and consistent buying patterns, fortifying the resilience of recurring revenue business models.

A significant disruptor in this landscape is the evident opportunity for innovation. Legacy solutions have left constituents underserved, presenting a gap ready to be filled by cutting-edge technologies poised to revolutionize government operations. The unique resistance of public-sector institutions to change becomes a strategic advantage, making them coveted customers. Consequently, companies in government software often showcase impressive logo retention, net dollar retention, and Annual Recurring Revenue (ARR), underscoring the sector’s appeal to investors seeking stability and sustained success.

2022 Government Software M&A Activity by Buyer Type
Historical Government Software M&A Activity by Buyer Type
Non-Private Equity Driven Deals
Private Equity Buyers
2019
2020
2021
2022
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Trends Reshaping Government Software

Explore the ever-evolving landscape of government technology. From the surge in digital transformations to the impact of changing policies, gain insights into the forces driving innovation and efficiency in government software.

Gov_TechRevolution_2

Technological Revolution with the Infrastructure Investment and Jobs Act (IIJA):

IIJA is more than investment in physical infrastructure (roads, bridges and otherwise), funding can also be used for investment in digital infrastructure to modernize antiquated systems and processes. Some of the many examples include:

  • Business Process Automation and Workforce Transformation: Governments can drive automation and workforce transformation using cloud-based tools and applications with integrated artificial intelligence (AI) and robotic process automation (RPA) capabilities.
  • Enterprise Asset Management: IIJA funding can support investments in platforms for data collection and analysis in areas such as inspections, repairs, predictive maintenance, and smart-city initiatives.
  • Integration: IIJA funds can be invested in cloud-based business technology platforms to connect disparate applications, acting as an integration hub for data sharing.
Gov_TechTransformation

Government Technology Transformation and Operational Enhancement:

  • Operational Efficiency Through Automation and Digital Overhaul: Economic pressures and labor challenges propel governments to prioritize operational efficiency, liberating employees from mundane tasks through automation.
  • Streamlining Services with Intelligent Technologies: Governments adopt SaaS solutions and chatbots to streamline operations, allowing for a more efficient focus on impactful projects and constituent concerns.
  • Resilient Governance with Cloud Computing: Embracing cloud computing, governments enhance scalability, reduce costs, and improve accessibility of IT infrastructure, promoting resiliency in service delivery.
Gov_DataSecurity

Data Security and Emerging Technologies for Governance:

  • Fortifying Cybersecurity Defenses: Governments intensify cybersecurity efforts, utilizing advanced tools like cloud workload protection platforms and AI to safeguard sensitive data and critical infrastructure.
  • Blockchain for Secure and Transparent Records: Exploration of blockchain technology reinforces security and transparency, especially in critical areas like identity verification, supply chain, and contract management.
  • 5G Networks Enabling Advanced Technologies: The rollout of 5G networks is anticipated to accelerate the adoption of advanced technologies, facilitating faster and more reliable internet connectivity for seamless governance.
Gov_CitizenCentric

Citizen-Centric Engagement and Smart City Initiatives:

  • Efficient Citizen Interaction Platforms: User-friendly interfaces, mobile apps, and online platforms bridge the gap between citizens and governments, creating a more efficient and citizen-centric experience.
  • Smart Technologies for Urban Optimization: Utilizing technologies like IoT, data analytics, and AI, governments design and develop smart cities to optimize resource allocation and enhance residents’ quality of life.
  • Enhanced Service Delivery through Technology: Technology acts as a catalyst, ensuring a more streamlined and citizen-centric approach to service delivery, fostering efficient interaction.
Gov_PublicSafety

Public Safety and Informed Decision-Making Technologies:

  • Crime Prevention and Technological Integration: Predictive analytics, AI, and machine learning empower governments to predict and prevent crime, optimizing emergency response efforts and bolstering public safety.
  • Environmental Sustainability Through Technology: Adopting renewable energy solutions, smart grids, and innovative waste management systems reflects a commitment to environmental sustainability.
  • Remote Work Solutions for Agile Operations: Telecommuting and remote work tools, accelerated in response to the COVID-19 pandemic, ensure continuity in government operations and services, fostering a flexible and adaptable workforce.
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3Q23 SaaS M&A and Public Market Report

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