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Technology / Data

Merger and Acquisition volume in software industry increases 6% in H1 of 2012: report

The total volume of mergers and acquisitions in the software industry during the first half of the 2012 has increased 6% to 785 transactions from 742 transactions in second half 2011, according to a latest report from US based independent investment bank Berkery Noyes.

According to the report, First Half 2012 M&A report for the software industry the total transaction value in the software industry however decreased 5% from $40.45bn to $38.49bn during the period.

M&A in the Consumer Software segment soared 29% compared to first half 2011, making it the fastest growing segment on a half-to-half year basis.

Consumer Software’s value, led by Facebook’s announced acquisition of Instagram for $1bn soared whooping 147% during the period.

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Transaction volume for software that is used to analyse and manage customer data, increased 40% between 2010 and 2011.

During the last six months the sector remained nearly constant, recording a 33% improvement over first half 2010.

During first half of 2012, the notable transactions in the sectors include Intuit’s acquisition of Demandforce for $424m, Facebook’s acquisition of Tagtile, and IBM’s acquisition of Tealeaf Technology.

The business intelligence software transactions rose 25% during the first half of 2012 compared to first half 2011.

Berkery Noyes managing director Jonathan Krieger said companies are looking to improve their existing digital marketplaces.

"By utilizing Software-as-a-Service (SaaS) analytics tools in particular, businesses are streamlining their communications and attempting to better service their customer base," Krieger said.

"This in turn can lead to more brand loyalty, repeated interactions, and higher revenues."

"SaaS businesses generate recurring revenue and their model affords significant visibility into future periods. This continues to get acquirers comfortable with their premium valuations."

Berkery Noyes said, during the first half of this year, Oracle remained most active Software Industry buyers acquiring Taleo, ClearTrial, Vitrue, and Collective Intellect.

The human resource management software, especially the cloud-based software increased 39% during the H1 of 2012 compared to first half 2011.

The median revenue multiple for human resource software companies rose 19% with Hellman & Friedman being the most active private equity acquirer in this segment.

Hellman & Friedman acquired Smart Human Logistics and SaaShr.com through its portfolio company Kronos.

Strategic human resource acquisitions in first half 2012 included Saba Software’s acquisition of HumanConcepts for $20m and Cornerstone OnDemand’s acquisition of Sonar6 for $14m.
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CBR Staff Writer

CBR Online legacy content.