Despite Promise in Health Care and Finance, Software and Service M&A Drops Again

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April 9, 2013 – Enterprise software and service vendor acquisitions continued a recent decline in volume and value in the first quarter of 2013, though there were bright spots for deals in verticals of health care and finance, according to a new report from Berkery Noyes.

In its 2013 first quarter analysis of industry transactions, Berkery Noyes put M&A deals in total at $7.4 billion, down 53 percent from the last quarter of 2012. There were 336 announced deals in the first three months of 2013, which was 26 fewer than last quarter and the lowest amount in more than a year.

Berkery Noyes noted that five of the top 10 software deals in the first quarter of this year were connected with vendors that specialized in either financial services or health care. The one deal eclipsed $1 billion in Q1 2013 – there were three in that same quarter of 2012 – was Fiserv’s $1.01 billion cash-and-debt deal for financial services industry competitor Open Solutions. The quarterly report also noted the larger deals in health care, like Allscripts’ $188 million buy of dbMotion and Genesys’ acquisition of for $110 million.

The niche software segment, which covers solutions and services for specific industries as classified by Berkery Noyes, went down 6 percent in Q1 2013 compared with the three months prior. On a whole, niche software deal volume was approximately the same compared with Q1 2012.

Infrastructure software deal volume dropped 45 percent in Q1 2013 compared with Q4 2012. That erased much of the 65 percent gain in infrastructure deal volume that the infrastructure software segmented racked up in Q4 2012 compared with Q3 2012.

Although a down quarter overall, Berkery Noyes CIO James Berkery attributed cloud and as-a-service interest and adoption as making up for reductions in traditional business data software and services. The report indicated that SaaS deals continued their upward march, with a 39 percent increase in volume in Q1 2013 compared with the previous quarter.

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