SOFTWARE AND IT-SERVICES
Hardly any hardware works without software. Data and information must be processed and evaluated, machines must be programmed, controlled, and monitored and processes must be recorded and managed. Software has been developed to fulfill these necessities thereby making digitization possible in the first place.
Since the software industry follows an “asset light” model and entry barriers are very low, the industry is extremely fragmented and saturated with innovation. Many applications have been developed over the last years and have significantly changed our everyday life. Despite the already high level of M&A activity, further increases can undoubtedly be expected as the sector is particularly popular with financial investors.
In the area of software, Aquin is specialized in industry-related technologies such as (M2M) communication solutions, control systems (such as PLC) and IT security. Aquin’s successful transaction support in the areas of embedded systems/IoT and control software, combined with in-depth knowledge in the areas of automation and electronics, has provided Aquin with comprehensive M&A knowledge in the software sector and a holistic understanding of the industry in whole.
Through our Senior Advisor, Gerhard Schempp, contacts can be made in various directions to make a successful transaction possible.
SOFTWARE AND IT-SERVICES – FACTS, FIGURES, BACKGROUND
Despite a significant decline in (publicly traded) valuations in 2022 compared to the previous year by approximately 30% (see the following chart), the decrease in the number of transactions was less pronounced at 17.8% and 0.5% in the software and IT services sectors, respectively (see the chart). Both strategic and financial investors continue to be acquisitive, making the evaluation of potential M&A options (buy or sell side) essential for every company.
Quelle: Capital IQ, Aquin Recherche
The significant valuation adjustment was primarily influenced by a downturn in economic and growth prospects, as well as the initiated interest rate reversal. In 2023, it appears that this fundamental situation – with relatively constant M&A activity at a pre-COVID valuation level – has not changed much. The focus is increasingly shifting towards the short- to medium-term profitability of companies and the proof of concept.
Source: Capital IQ, Aquin research
The predominantly small and medium-sized business-oriented software and IT services market in Germany has a market volume of approximately 90 billion EUR, with annual growth rates of 10% in the software sector and 5% in the IT services sector. In addition to a few large platform companies, numerous specialized niche providers have established themselves.
Source: Aquin research, bitkom
SEGMENTS
| Enterprise Software „Application software for specific business areas and processes that is used across all industries. In addition to ERP and CRM solutions, this includes in particular business intelligence (BI) and supply chain management software, as well as solutions in the areas of HR and production (MES, CAD, PLM).“ |
| Vertical Software „Software products and solutions tailored to individual industries (e.g. FinTech, LegalTech, MedTech, EdTech).“ |
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System software |
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IT-Services |
SELECTED TRANSACTIONS
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