Software Valuations and Insights Report | H2 2023

The Software Valuations and Insights Report H2 2023 provides a review of the market and the team’s perspective on what we expect to see in the year to come.

Key takeaways from the report:

• In 2023, Software revenue multiples experienced a period of encouraging growth through the year, with averages overall recovering to pre-pandemic levels; share prices recovered strongly, although IPOs were largely on hold.
• M&A activity was impacted by macroeconomic pressures and increased geopolitical instability;. Global deal volumes continued to fall in 2023, down 36% on 2022 and total deal values down by 41%.
• As we start 2024, we are seeing growing sentiment of cautious optimism, with some forecasts pointing to a rebound to higher economic growth in late 2024 as inflation (and potentially interest rates) fall.
• Premium assets (high growth, scaled, profitable, mission-critical services) will continue to attract premium prices during 2024 as both private equity and strategics compete for the best businesses.
• Investors are placing greater scrutiny on investment decisions. This is benefiting sub-sectors with mission critical capabilities or those able to clearly demonstrate an ROI (eg HCM and supply chain software). Firms at the forefront of AI adoption are also well placed to deliver strong growth in 2024.

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