Higher values lead to more M&A activity in software space
The total value of the world’s listed software businesses rose by more than $2.8 trillion during 2020, as businesses invested heavily in new technologies during the Covid-19 pandemic.
Research from investment bank GCA Altium reveals that the market capitalisation of the world’s listed software sector now stands at $7.5 trillion, 59% higher than at the end of 2019 ($4.7 trillion).
Growth has been driven by businesses in the SaaS space, with more than $1 trillion added to the value of firms like Zoom, Adobe and Splunk over the last 12 months. Platform-based companies like Oracle, Microsoft, IBM and Cisco have seen their values rise by $494 billion, while ERP and business technology firms including Slack, Salesforce and Shopify have added $241 billion.
This rapid growth has driven increased M&A activity in the software space, with a 17% rise in M&A transactions completed globally in 2020 (1,705, up from 1,453 in 2019) and a 50% increase in deal value ($165 billion, up from $110 billion in 2019).