January 12, 2012 – Software and solutions vendors will open their fattening wallets wider for transactions in 2012, continuing the trend from last year and stretching to more on-demand providers, according to a market assessment Thursday from Corum Group.

Corum, a software transaction consultancy, forecasted about 3,800 deals across its 26 sectors in the software and services spaces for this year, up just more than 100 from the total for 2011. The value for those deals in 2012 is expected to jump 13 percent, to $250 billion, compared with last year, carried in part by the 62 percent increase in transactions that rank in the multimillion and billion-dollar range. There is also an anticipation of more deals for private providers, whose figures are not disclosed, as well as moves by private equity firms, says Corum Director of Research, Elon Gasper.

“It was quite a rollercoaster ride [in 2011], but the money just kept coming in. With cash like that, a company can either buy its own stock back, it can give dividends, or it can make acquisitions, which is going to continue to drive M&A into 2012,” says Gasper.

Continued interest from enterprises of all sizes in on-demand services is driving up transactions on the vendor side, the assessment stated. In a review of the cloud market, Corum Director Rob Schram said spending on deployments will spill well into $150 billion over the next few years. From a transactions standpoint, Schram says that services and communications providers will drive larger cloud deals, similar to Verizon’s $1.4 billion buy of Terremark last year. He also pointed to cloud provider Rackspace as a prime target for a buyout by a top tech vendor or communications provider.

Reflecting on some recent deals by Oracle and IBM, the software as a service transaction market in 2012 should continue to undergo buyouts at four to five times the revenue amount of the smaller SaaS providers, says Corum Chairman Ward Carter.

“The real driver here, of course, is growth, and SaaS should strongly outpace [transaction values] for on-premise solutions going forward,” says Carter.

The panel during Thursday’s transactions presentation also included input from vendors at IBM, Concur, Salesforce, Google and RIM. A replay and more figures from the seminar are planned to be posted here.
For an Information Management review of the top 10 transactions from 2011, click here.

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