The Global Technology Market Review – Q1 2020

Welcome to the Q1 2020 Global Technology Market Review – CG Results International’s quarterly review of deal activity and valuation metrics for the technology sector. We cover all aspects of technology with a focus on enterprise software/SaaS, software-related IT services, and tech enabled services. Each quarter we consider the macroeconomic trends and analyse the activity in the M&A and public markets across enterprise software, technology services, cybersecurity and marketing and eCommerce technologies. Despite current market turbulence, 2020 will remain a good year to contemplate fundraisings, exits or acquisitions in the technology sector and this is reflected in our outlook for the year.

Read the full report, or navigate to the subsectors relevant to you.

Highlights of the quarter:

Q1 will be remembered as the quarter when COVID-19 sent shockwaves around the world and we expect this to have at least a short-term impact across all of the sectors that we track.

Global indices and valuations are down by c. 10%+ across the space but still don’t look that low compared to historical standards; all have rebounded somewhat since the lows of Mid-March, with the Nasdaq back to levels seen six months ago.

As companies focus on cash generation and preservation in the uncertain climate, M&A has understandably taken a hit. Nevertheless there were still a number of notable transactions, with the majority taking place before COVID-19 really took hold, as companies continued to fill missing capabilities and compete to capture as much of clients’ digital transformation budget as possible:

Medallia acquired LivingLens, a video feedback platform, to add rich customer insights to Medallia’s Experience Cloud solution and enable brands to capture and analyse video and voice. CG Results International advised LivingLens on this transaction.

Salesforce acquired Vlocity, the leading provider of industry-specific cloud and mobile software, for $1.3bn, to deliver superior omni-channel customer experiences.

Advent International acquired Forescout, one of three $1bn+ cybersecurity acquisitions in the quarter. Forescout enables holistic security protection across the increasingly complex interconnected enterprise network and is the perfect example of the type of business that will do very well with the current heightened focus on increasing digitisation and remote working.

Accenture made nine technology services acquisitions in the quarter, adding capability across data analytics, cyber, ERP and Mulesoft systems integration.

Outlook:

We expect public markets to slowly recover, and based on the financial crisis in 2008 this will take at least a couple of quarters.

We expect M&A activity to bounce back strongly:

Most of the PE and trade acquirors that we have spoken to are very much open for business, although for the larger deals ($200m+) the sentiment is perhaps to wait for the market to settle down.

The general view is that COVID-19 represents a substantial opportunity as enterprises focus on resilience at the Board level and further accelerate their digital journeys – moving to cloud faster, embracing ecommerce, cybersecurity enhancements and remote working.

We hope you enjoy the Global Technology Market Review for Q1 2020, please do get in touch if you would like to discuss any of the themes with us. We look forward to speaking with you soon.