2010 l 3rd Qtr l Trends Report l Software

Thursday, October 07, 2010

Third Quarter Key Highlights

• The most active acquirer within the Software Industry through Q3 2010 was Google Inc. with 17 acquisitions, 10 of which occurred within Q3 2010. Google Inc. has made additional purchases in 2010, but we did not classify those as within the software industry.
• The largest transaction in Q3 2010 was the purchase of McAfee by Intel Corporation for $7.5 billion.

Third Quarter Key Trends

• Total transaction volume in Q3 2010 increased by 6 percent over Q2 2010, from 247 to 263 transactions.
• Total transaction value in Q3 2010 increased by 2 percent over Q2 2010, from $28.5 billion to $29.1billion.

Multiples & Value Trends

• Median multiples have shown marked growth from 2009 to the first nine months of 2010. Median EBITDA multiples rose from 10.0 to 15.9, a 59 percent increase, while median revenue multiples rose from 1.5 to 2.3, a 53 percent increase.
• Median value has made similar gains, due in large part to the strong value of transactions in Q2 and Q3 2010.

Top Ten Deals Through Q3 2010

• The top ten deals by value have shifted considerably since our half year report, with 6 acquisitions entering the list from Q3 2010: Intel Corporation’s acquisition of McAfee, Inc., Hexagon AB’s acquisition of Intergraph Corporation, HP’s acquisitions of both 3PAR Inc. and ArcSight, Inc., KKR’s acquisition of Visma ASA, and IBM’s purchase of Netezza Corporation.
• These acquisitions, totalling $16.9 billion in value, represent 27 percent of total transaction value in the 1st nine months of 2010, and 58 percent of Q3 2010 transaction value.