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Enterprise Stack – Q3 2018 Market Review

By William Garbutt 11 Oct 2018

Welcome to the Q3 2018 edition of our Enterprise Stack Report – Results International’s quarterly market update for the enterprise software segment.

Highlights in the quarter include:

  • Enterprise software M&A activity is at its highest since our records began in 2013, with 443 deals this quarter, alongside the highest total disclosed deal value (c.$53bn) driven primarily by Broadcom’s acquisition of CA Inc. ($18.4bn) and Adobe’s acquisition of Marketo ($4.8bn).
  • Valuations also remain at record levels both on the public market and within the M&A market. Adobe’s acquisition of Marketo this quarter at 14.8x revenue follows Microsoft’s Q1 acquisition of Github (reportedly for c.30x ARR) and Salesforce’s Q2 acquisition of Mulesoft at 19.9x revenue. These high valuations are driven by a combination of PE, VC and entrepreneurs capitalising on the attractive market and major software vendors’ search for innovators, plus record levels of dry powder within PE and VC funds which is pushing competition for the best assets.

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  • HCM platforms and specifically workplace collaboration tools attracted a lot of attention from venture capital funds, following successful exits in the sector (WeWork’s acquisition of Teem; Guidepost’s acquisition of ThinkHR). Most notably, Slack raised $427m in a Series H fundraise this quarter, with a total of $1.2bn raised to date. Monday.com, a similar collaboration tool, was also successful in raising $50m through this quarter’s Series C fundraise.
  • AI and machine learning technologies continues to drive notable activity; Thoma Bravo acquired AI-enabled middle office management Apptus for $1.6bn; Salesforce acquired AI-powered marketing performance business Datorama for $0.7bn and Darktrace, an AI-enabled cybersecurity business raised $50m in a Series E fundraise, doubling its valuation from the year before.

The remainder of 2018 will see a continuation of investor appetite across the board for enterprise software businesses. We hope that you enjoy this document and look forward to discussing the data and underlying themes with you. If you are contemplating fundraising, exit or growth through acquisitions, please do get in touch.

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William Garbutt

Associate

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