The global software sector experienced a mixed quarter in Q1 2022, with a significant decrease in deal value despite hitting a record high of 700 deals. The underlying reason for this was a decline in M&A valuations, which were significantly different from 2021. The robust mid-market activity in Q1 2022 highlighted the continued appetite from software-focused PE buyers. Public market software multiples returned to some historical levels, while recent IPOs and mid-market activity were reflected in Q1 M&A deal multiples. Firm Overview suggests that PE acquirers are becoming more disciplined on valuations, and strategic buyers are engaging more selectively. SPAC deals accounted for less than 10% of deal value, and annual deal volume and deal value indicate a decline in both metrics.
