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M&A IN THE SOFTWARE INDUSTRY – TRENDS AND SUCCESS FACTORS

The panellists Matthias Allgaier, Managing Director of Summit Partners; Dr. Tobias Koppmann, partner at McDermott Will & Emery; Shawn McMorran, Managing Director of Marlin Equity Partners; Dr. Sven Oleownik, Partner and Head of Germany by Gimv Germany; Christian A. Resch, Managing Director of Goldman Sachs, Private Capital Investing; as well as Morten Weicher, Partner and Co-Founder of GRO Capital; and panel head Ralf Philipp Hofmann, Managing Partner and Member of the Global Executive Committee of Drake Star Partners, discussed the current trends of M&A in the software industry.

The market boom of the software industry recorded in 2017 is continued in 2018. High-level transactions have repeatedly occurred during the last five consecutive quarters, such as the recent sale of Marketo to Adobe for $4.75 billion. This only increases the interest in an in depth analysis of this topic.

On the one hand, the panellists agreed on the great potential of the software market. This potential lies in the constant appearance and development of new market sectors. One of these up-and-coming sectors is, of course, cybersecurity, where the globally leading companies have not yet been finally determined. On top of that, the United States and Europe continue to be very attractive targets for these investments.

On the other hand, the panellists warned that operators should be careful where to invest, because certain business models continue to be more valuable than others. In general, the more instruments the company can put in play, the better its position for negotiating the deal.

Alongside this first risk, the panel then turned to an important legal aspect. The panelists agreed that it can become legally difficult to obtain the key assets of such transactions. Therefore, to assure to get what you paid for, the preparation of the transaction is decisive. The success factors thus depend on the strategic and financial aspects you put in play.

Asked if there was a difference between the United States and Europe concerning the trends of the software industry, the panellists answered that although such a difference existed a few years ago, this is not the case anymore.

All in all, the panellists agreed that due to dynamic legal changes and the current great willingness to invest, one could only be optimistic about the further development of M&A transactions in the software industry.

Chaired by
Ralf Philipp Hofmann,
Drake Star Partners

From left to right: Dr. Tobias Koppmann, McDermott Will & Emery; Christian A. Resch, Goldman Sachs; Shawn McMorran, Marlin Equity Partners; Matthias Allgaier, Summit Partners; Morten Weicher, GRO Capital; Dr. Sven Oleownik, Gimv Germany; Ralf Philipp Hofmann, Drake Star Partners
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