GlobalData names enterprise software companies destined to become M&A targets

GlobalData has identified mergers and acquisitions (M&A) as one of the top themes driving the enterprise software sector.

Over the last five years, the value of M&A deals in the enterprise software sector reached $436bn, with the key disruptive themes driving those deals being cloud computing, artificial intelligence (AI), big data, fintech, digitization, and collaborative working.

Cyrus Mewawalla, Head of Thematic Research, said: “Any corporate executive that wants to grow their company needs to understand all the themes that impact their sector. Companies today are under tremendous pressure to invest in the disruptive tech themes that are shaping their industry, not merely to gain competitive advantage, but to survive.

“In enterprise software, M&A is driving company valuations higher. Big Tech will continue its acquisition spree, with the aim of strengthening their skillsets in next generation technologies like AI, cloud computing, augmented reality, blockchain, and the Internet of Things (IoT). And well-positioned companies like Splunk, Autodesk and PTC are likely to be top of the wish list. When an acquisition is announced the target company’s share price typically rises by 30%.”

Splunk, Autodesk and PTC all gained the highest Thematic score (5 out of 5) for the M&A theme in GlobalData’s Thematic Scorecard for the enterprise software sector. A Thematic score of 5 out of 5 indicates that the company is likely to become a bid target in the next 3 to 5 years.

Splunk is a key player in the management of big data and would be a prime target for an acquirer such as Cisco, Samsung, HP Enterprise, Huawei, Microsoft, IBM, SAP or Oracle. Real-time data analytics are a useful tool for AI, machine-to-machine communications, IoT, business intelligence, and even cybersecurity tasks such as security information and event management (SIEM).

Autodesk and PTC’s computer aided design (CAD) software revenues will continue to see growth from key themes such as virtual and augmented reality, 3D printing, AI, computer vision, high-tech engineering, and the IoT. Larger software houses such as Adobe or industrial conglomerates like GE could enter these high growth markets by buying either Autodesk or PTC.

Other enterprise software companies which also scored 5 out of 5 for the M&A theme and are likely to become M&A targets include Nuance Communications, Cloudera, Alteryx, ServiceNow, Workday, Constellation Software, Cornerstone OnDemand and Paylocity.