Telco Software M&A Market – Sector Trends and Valuation Analysis (2015 – 2017)
Market activity has perceptibly picked up over the last three years with transaction volumes increasing by almost 48% from 48 in 2015 to 71 in 2017. This is representative of a trend towards increasing consolidation by leading service providers, hardware manufacturers and technology players.
While valuations shift from subsector to subsector, the overall mean revenue multiple for Telco Software, based on publicly announced transactions, is 2.23x for 2017, slightly down from 2.47x in 2015. This indicates that while the M&A market is picking up momentum, there is price rationality setting in with acquirers closely monitoring their RoI. Strategic acquirers are willing to pay a premium for strategic fit and potential synergies but not beyond a point. Consequently, Boise Capital does not see any major deals priced at double digit revenue multiples in the past few years, barring the odd small transaction.
About Bois Capital
Bois Capital is a technology-focused independent investment bank that provides financial advice on significant mergers and acquisitions. The Bois Capital team has extensive international corporate finance experience and international, senior level connections in the technology sector, including cloud, software, IT services, digital media, wireless, networking, and big data/analytics.
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SOURCE: Bois Capital
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