Software and technology M&A update: H2 2023

Unveiling resilient trends

The following report developed by Baker Tilly Capital, LLC provides an update on the software and technology (S&T) mergers and acquisitions (M&A) market in the second half of 2023 (H2 2023). The report includes an overview of the market performance, M&A activity, transactions by segment and buyer and U.S. M&A activity.

Here are some key takeaways from the report:

• The S&T sector maintained its robust performance throughout the latter half of 2023, propelled by the relentless momentum of digital transformation across various industries
• Investors continue to gravitate towards Software as a Service (SaaS) companies, enticed by their unique business models characterized by strong, predictable recurring revenue streams and scalability with higher margins
• While U.S. S&T M&A activity exhibited a slowdown in the latter half of 2023, with 460 deals totaling $59.7 billion, this trend aligns with pre-pandemic averages, signaling a return to stability
• In the latter half of 2023, notable SaaS M&A transactions, such as the take-private acquisitions of Alteryx and New Relic by Clearlake Partners/Insight Partners and Francisco Partners/TPG, underscored the enduring appeal of SaaS firms to investors
• Despite lingering macroeconomic uncertainties and geopolitical tensions, the S&T M&A landscape remains resilient, with participants cautiously optimistic about improved transactional activity in the foreseeable future