SEG’s 2Q20 SaaS M&A Update Highlights

SEG’s 2Q20 SaaS M&A update is a snapshot of M&A deal activity across the software industry. The report includes historical deal volume by product category and vertical, valuation stats, most active buyers, notable deals, private equity activity, and more.

View the full report on our research page: SEG 2Q20 SaaS M&A Update. We’ve highlighted some key points from the report below:

Highlights:

Overall software deal volume (including SaaS, on-premise, mobile, and internet deals) was impacted by COVID-19 and the resulting market downturn, decreasing nearly 20% QOQ to 580 deals in 2Q20 from 717 deals in 1Q20. Software M&A deal volume dipped below 600 for the first time since 2016.

SaaS M&A deal volume declined 30% QOQ, posting 207 deals in 2Q20. Further, we expect to see annual deal volume decrease for the first time in 2020.

On a monthly basis, SaaS M&A deal volume hit a low point in May. Signs of recovery showed in June and we expect to see the rebound continue through July and August.

SaaS M&A valuation multiples typically lag public market multiples and has not yet shown the influence by COVID-19. The median SaaS M&A multiple was in line with prior quarters (4.7x EV/Revenue).

Strategic and private equity driven deals made up an equal share of acquisition activity in 2Q20. Highly acquisitive buyers include VMware, Volaris Group, MRI Software, Microsoft, and Thoma Bravo.

In addition, Sales & Marketing continues to be the most active product category in terms of M&A deal volume. Healthcare SaaS was the most active vertical, comprising 23.2% of vertical deals in 2Q20.

Read SEG’s SEG 2Q20 SaaS M&A Update for more information on M&A deal activity across the software industry.