M&ASEG Snapshot: 1Q20 SaaS M&A Update

While too early to measure, economic uncertainty caused by COVID-19 is expected to cause a decline in M&A activity during 2020. This is especially prevalent as strategic and private equity buyers begin to tread more lightly in the current environment.

M&A deal volume was not impacted in Q1, as the pandemic concerns did not arise until very late in the quarter. Overall software M&A activity remained strong with 664 transactions, while SaaS M&A activity reached 296 M&A deals.

Healthcare M&A activity grew 38% QOQ and was the most active vertical in 1Q20. Top product categories for healthcare transactions include Sales & Marketing, ERP, and Communications and Collaboration.

Private equity driven deals comprise nearly 50% of SaaS M&A activity in 1Q20. Select most active private equity firms with direct platform acquisitions include Thoma Bravo, Marlin Equity Partners, Vista Equity Partners, and Providence Equity Partners.

In addition, select most active strategic buyers include Salesforce, VMware, Medallia, and MRI Software. As strategic buyers begin to tighten their M&A belts, we expect to see M&A activity by strategic buyers fall in Q2.