Here at Results we cover all aspects of technology with a particular focus on enterprise software / SaaS, software-related IT services, and tech enabled services. However we like to turn our attention to a number of specific sectors at the end of every quarter to consider the trends and analyse the activity in the M&A, fundraising and public markets.
We have produced our view on the previous quarter’s proceedings in a series of individual market reviews on:
Share prices across the majority of Results International Global Enterprise Software Indices continued to rise in Q3 (albeit at a slower rate than H1) as the Nasdaq moved towards record highs, underlining the strength of global software public valuations; analytics, HCM, next-generation security and pure-play SaaS are all currently trading at 6x plus revenue multiples.
The most impressive enterprise software index performance in the quarter was MarTech’s (up 26% in the quarter, and c.75% in the last 12 months) led by Shopify which has seen a 550%+ increase in share price since its IPO in May 2015. However, in spite of this example and other strong performances across the broader enterprise software industry, there were no IPOs to report in Q3. In contrast there were a number of global private market fundraisings, with the UK in particular having a good run. Darktrace, the UK-based cybersecurity vendor, raised $75m in Series D funding, while earlier stage UK ERP and HealthTech companies, Receipt Bank and Push Doctor, both raised $75m and $26m respectively, demonstrating the breadth and vitality of the UK technology sector.
Technology M&A activity was down slightly in Q3 compared to the first two quarters of the year, but year-to-date volumes remain in line with historical levels and valuations strong. Of particular interest in the quarter were notable divestitures of non-core assets by leading listed players including Symantec (security software), Tremor Video (AdTech / MarTech), and NantHealth and McKesson (both HealthTech) and from an acquisition perspective, continued domination by Private Equity once again demonstrating that investors are matching and often beating their strategic counterparts on price.
Whilst uncertainty for UK and EU companies over Brexit remains, this appears to have had little impact on M&A and fundraising activity with the fundamental drivers of consolidation and investment within all of our sectors – growth, innovation, access to new geographies and the emergence of new buyers – continuing to drive strong levels of activity.
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