Deloitte M&A sector report
Software and IT services
Quarterly updates with recent M&A transactions, analyses and insights into key industry trends, covering the Nordics.
Q3 | 2021
Another strong quarter for M&A within Software in the Nordics in Q3
The strong M&A market continued in the Nordics in Q3 within software. The deal volume was the highest recorded in a third quarter, with 59 deals being announced. The M&A pricing levels within software has however declined over the last quarter with a median EV/Sales multiple of ~3.4x for the last twelve months as per end of Q3, compared to ~4.4x at end of Q2. Following the Q1/Q2 correction in SaaS multiple valuations, SaaS stocks have rebounded up to ~15x NTM Sales valuations for both the Deloitte Global and Nordic SaaS index by the end of Q3, driven by continued strong quarterly results and uplift in forward estimates.
The transaction volume in the Nordic IT services market slowed down somewhat in Q3-21 with 12 transactions announced. However, total deal volume YTD-21 is 61% higher compared to YTD-20, with 11 transactions more YTD than the total deal volume in 2020. The attractive M&A pricing levels within IT services continued in Q3-21 with a median EV/EBITDA multiple of 10x for the last twelve months. The Nordic IT services stocks continued with strong valuations in Q3, now trading at ~16x NTM EBITDA, approx. 3x above global peers
For this edition of the quarterly report, we have focused our attention on an industry we believe is on the brink of digital adoption, the Construction industry. On the back of historical under investments, a fragmented supply chain, with no or limited incentive to digitize, technology presents a significant value creation opportunity. Investors are paying attention as M&A activity and VC funding has skyrocketed over the last few years. We believe it will continue to do so, as the digital transformation journey takes a stepwise change
The Q3-2021 report reflects transactions involving a Nordic target registered by Mergermarket, as well as our transaction experience and insights into key industry trends.
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Q2 | 2021
The strong M&A market continued in the Nordics in Q2, both within software and IT services.
The strong M&A market continued in the Nordics in Q2, both within software and IT services. Within software the deal volume in a quarter reached new heights, with 70 deals being announced. The high M&A pricing levels within software also continued in Q2, albeit slightly lower than LTM as per end of Q1-21, with a median EV/Sales multiple of ~4.5x for the last twelve months as per end of Q2 compared to ~5x at end of Q1.
Q1 | 2021
The strong Nordic M&A market within software and IT services continued in Q1
The strong M&A market continued in the Nordics in Q1, particularly within the software segment, where the deal volume in a quarter reached new heights with 62 deals being announced. The Nordic IT services market also has had a strong start to 2021 with 19 M&A transaction in Q1.
February | 2021
A record breaking year for M&A in the Nordic software and IT services market
2020 was a remarkable year for M&A activity within the Nordic software and IT services sector. The market quickly rebounded from the dip in March caused by Covid-19 and software trading multiples reached an all-time high, with the highest number of deals recorded over the last 5 years. The Nordic IT services market continued to perform strongly in 2020, trading at above average multiples and with sustained high M&A deal pricing and volume.