Software M&A shows resilience in challenging market | White & Case LLP – JD Supra

Software M&A shows resilience in challenging market | White & Case LLP – JD Supra

While not unscathed by the ongoing pandemic, software deals are proving to be resilient to the effects of lockdown…

The performance of software M&A in 2020 is indicative of a sector insulated from the worst effects of a pandemic that has bloodied industries dependent on face-to-face interaction.

Dealmaking in the sector dipped in the first half, but the decline was far less pronounced than in the overall M&A market. There were 890 transactions targeting software companies globally in the first six months of 2020, a 23% annual drop from H1 2019. Total value over the same period fell by 29% to US$74.3 billion. This was notably less steep than the 32% fall in value and 53% drop in volume in global M&A—demonstrating the resilience of the sector in the face of the COVID-19 pandemic.

As was the case in other industries, Q2 reflected the effect of the crisis on M&A as deal parties paused live transactions or discontinued negotiations altogether. Of the top 10 deals in H1, only one—the US$1.8 billion sale of Turkey-based mobile game developer Peak Games to Zynga—was announced in Q2. Indeed, the US$19.54 billion in value recorded in Q2 was the lowest quarterly total value since Q2 2013, which registered US$18.2 billion in deal activity.

Banking on software

A number of factors ensured software outperformed the overall market. One is the sheer pervasiveness of technology and the role it plays in ongoing sector convergence. Fintech and the transition towards open banking are prime examples of the
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