Deal tracker: Big September deals fail to elevate Q3 infotech M&A overall

U.S. information technology M&A activity continued to slump in September off of historic highs a year prior, though valuations stayed elevated.

The sector's September deal volume fell 39.0% year over year to 183 transaction announcements. That solidified a sharp retreat in the third quarter as macroeconomic fears gripped the market.

Across the globe, technology and telecommunications aggregate deal values hit $82 billion in the June to September period, compared to a $200 billion quarterly average since mid-2020, according to an Oct. 4 report from 451 Research.

A handful of high-dollar contracts stood out. September's largest deal — Adobe Inc.'s $19.41 billion bid for rival Figma Inc. — represented the second-largest infotech transaction of the year.

Based on commentary provided during Adobe's Sept. 15 earnings call, the company is putting Figma's enterprise value between 50x and 100x its trailing 12-month revenue. The price is about 2x Figma's most recent pre-money valuation based on a January funding round.

Adobe's market capital had fallen about 35% year-to-date through Sept. 14, the day before the deal announcement. Its stock price dropped another 21.6% after the deal announcement through Oct. 7, which will weigh on the final value of the cash-and-stock transaction for Figma.

Adobe's Creative Suite — which includes Photoshop, Illustrator and Premiere Pro — has long been the professional standard among digital creators and designers, though its growth has slowed in recent quarters. Meanwhile, Figma has gained attention by providing simple, cloud-based and collaborative design tools. The Figma deal will be Adobe's largest acquisition to date.

* Review terms of September's largest U.S. information technology deal on S&P Capital IQ Pro. * Use our Transactions Statistics page to run a custom screen of M&A by industry or geography.

 

September's second largest transaction was private equity firm Vista Equity Partners Management LLC's $4.42 billion offer for about 98% ownership of cybersecurity training specialist KnowBe4 Inc.

For technology targets, Vista Equity has been the most acquisitive private equity firm in 451's records, which date back to 2002. Vista Equity grew its assets under management to $95.73 billion at the end of 2021 from $64.37 billion at the end of 2019. About three-quarters of its portfolio is comprised of information technology assets, according to S&P Global Market Intelligence data. The private equity firm also participated in the top 10 sector deals in August with its $9.83 billion bid for tax-compliance solutions vendor Avalara Inc.

Vista Equity is valuing KnowBe4 at 14.6x trailing 12-month revenue and a 38.7% premium to KnowBe4's stock price a day before the deal announcement.